World outlook worsens – so more money to be printed
Thursday April 18th 2013
Central banks are printing money explicitly to boost asset prices. This week’s worse than expected economic data offshore mean they will be more determined to keep the printing presses in operation. That implies more money seeking a home in the likes of the NZD and businesses need to give thought in their strategic planning to handling this liquidity-driven world. I offer some thoughts. 1,246 words
This week we have learnt about a surge in exports in February – but it won’t last. Advertising for jobs appears to be trending upward, and offshore the events in Cyprus are one reason why the NZ dollar will remain strong and go higher.
This week I look at the drought and how it probably won’t create a recession, how it was worth giving $10 to a bloke in Singapore but not $50, some positive financial sector growth signs for Singapore, and I reference a US survey producing similar foreign house sales data as for my survey of last week.
For the next week I’ll be in Singapore but will be running the usual monthly BNZ Confidence Survey and BNZ-REINZ Residential Market Survey. The latter will include questions on offshore presence in the housing market and will give data rather than merely anecdotes to assist the debate on the extent to which foreign buyers are affecting the Auckland market in particular.
New Zealand’s domestic economy is picking up, lead by construction. But export receipts are falling and with the NZD set to stay high and go higher, a current account deficit blowout looms – then probably a credit rating cut to follow the 2011 reduction, in maybe 3 – 4 years time. Also, in the Housing section we note migration flows are now officially positive and therefore adding to pressures – even after the 27% rise in Auckland house prices since 2009.