1. New Zealand economic outlook Grant Spencer Reserve Bank of New Zealand September 2012 Eriksens Actuarial Auckland, 25 September 2012

2. ...and this presentation is not financial advice Off the record please…

3. Trading partner GDP growth (annual) Weaker global outlook

4. Financial markets supported by Central Bank actions

5. Reflected in lower bond yields 5

6. Global risk appetite is supporting NZD 6

7. Which is holding back export growth 7 Export volumes

8. Global developments are slowing NZ’s progress 8 Weaker world demand and commodity prices High NZD putting pressure on export sector Offshore funding for banks easier but still expensive

9. Consumption stronger but savings continue to recover 9 Household saving rate and consumption

10. Reflected in weak credit – strong deposits Annual bank credit and deposit growth 10

11. Strong recovery in residential investment 11 Residential investment

12. Stronger house prices – for a period 12 Annual house price inflation

13. Government consolidating Fiscal impulse (share of nominal GDP) 13

14. Net result: gradual recovery in GDP growth 14 GDP growth (annual)

15. Inflation pressures remain moderate 15 Consumer price inflation

16. Interest rates remain flat 16 90-day interest rate

17. End of presentation

18. Public debt overhang remains a major issue 18 Gross government debt as percent of GDP (IMF WEO, April 2012)

19. European bond rates: convergence -divergence

20. Canterbury rebuild profile Canterbury rebuild profile (share of potential GDP)