1. New Zealand’s Economic Outlook Reserve Bank of New Zealand February 2009

2. Off the record please…

3. 1.International financial crisis Huge financial losses Credit expensive and scarce Big asset price falls

4. The financial crisis so far

7. Large credit losses

8. Large housing market corrections

9. 2.International economic slowdown Slower trading partner growth Falling commodity prices Lower exchange rate

10. Much weaker world growth

11. Commodity prices falling - oil

12. Export commodity prices falling

13. Lower exchange rate providing buffer

14. 3.Effects on the NZ economy Pressure on businesses Pressure on household sector The economy adjusts

15. Lower investment intentions…

16. …and lower employment intentions

17. House prices to fall further…

19. …and household spending to remain subdued

20. Means a slowing economy

22. … and should provide significant inflation relief

23. Prompting significant OCR reductions

24. Focus on financial stability Providing liquidity Government Guarantee Schemes Other actions

25. End of presentation