Recovery slower than usual, says English
The sluggish economic recovery is not likely to turn into the kind of surge seen in previous economic rebounds, Finance Minister Bill English told an Auckland business lunch today.
The sluggish economic recovery is not likely to turn into the kind of surge we have seen in previous economic recoveries, Finance Minister Bill English told an Auckland business lunch today.
The finance minister expanded on comments he made last week to a parliamentary select committee, when he pointed out the area which is seeing growth –v the tradable sector – employs only a quarter of the people in the non-tradable sector and this latter sector needs to consolidate after unsustainable, debt driven expansion over 2003-09.
Today Mr English added the international and currency factors to the picture.
“First, world currency markets find themselves in an unusual situation. Since Bretton Woods collapsed in the early 1970s, the system of floating exchange rates has worked tolerably well. Generally, deficit nations with weak growth and falling interest rates have depreciated, and vice versa.
“The anomaly at present is that a block of nations with strong growth and apparently under-valued currencies, notably in Asia, have been reluctant to appreciate. Despite this, the currencies of major economies with weak growth, including both the US and UK, have depreciated, as is appropriate.
“The upshot is that a number of smaller nations, including New Zealand, have experienced greater upwards pressure on their currencies than usual.
"While this is unlikely to be sustained, it is not helpful to the adjustment our economy needs to undertake.”
Rob Hosking
Thu, 17 Feb 2011
Thu, 17 Feb 2011
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Recovery slower than usual, says English
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