New Zealand Coping Despite Fragile Global Economy

11 May 2012 11:00am - Victoria Wedderburn

New Zealand Coping Despite Fragile Global Economy

Reserve Bank governor Alan Bollard has said the New Zealand economy has grown modestly in the past three years but remains vulnerable to a downturn in global economic and financial conditions. In its May 2012 Financial Stability Report Dr Bollard said financial market sentiment had improved since the start of the year, “Financial market sentiment has improved since the start of 2012, largely reflecting policy measures in Europe which have helped to mitigate the effects of softening economic growth, stretched sovereign debt positions and weak bank balance sheets.”

He added, “However, the situation remains fragile given limited progress in addressing Europe’s underlying issues. In New Zealand, households remain cautious and have been saving while business investment has been weak.” Private sector indebtedness has declined, although this has largely been offset by rising public debt. "Growth in most advanced economies remains weak and there have been recent signs of slowing in Australia and China. Commodity prices have eased in recent months which could create financial pressures for some primary exporters if sustained."