Billion dollar hit coming for dairy industry
Mon, 11 Jun 2012 6:15p.m.
By Adam Ray
Earnings from dairying and other primary industries are expected to take a billion dollar hit in the next year.
While prices are expected to rebound in a few years, one leading economist says Europe's economy is so weak that New Zealand will suffer.
Dairying and other primary exports are huge earners for New Zealand - making up 70 cents in every dollar we earn overseas
But the sector's about to get a short and sharp shock
“We’re expecting agricultural returns on the whole to drop from about $21 billion to $20 billion – five percent,” says Ministry for Primary Industries deputy director-general Paul Stock.
Mr Stocks says commodity prices have dropped as other countries produce more, but he thinks agricultural earnings will bounce back in a year or two - despite the mess in Europe.
“Europe’s always going to be important, high value for us. But we have a lot of other places to sell to,” he says.
Spain is the latest European country on the brink – it has been given a €100 billion to rescue indebted banks
To some it is a bailout, but to the country’s Prime Minister it is a victory.
“Yesterday was a win for European credibility; yesterday was a win for the euro,” says Mariano Rajoy.
But Europe's economy is now so weak that demand for Asian exports is slacking. Economist Shamubeel Eaqub says growth is slowing in China and that is a huge problem for New Zealand.
“We’re still stuck in this globalised economy where the weakness in Europe will have an impact in New Zealand and that’s inescapable,” says Mr Eaqub.
Mr Eaqub says New Zealand and the world economy face a time of weak growth while Europe struggles with its huge debt mountain.
The Reserve Bank Governor's decision on the official cash rate this Thursday will give another indication on the economy's direction.
Alan Bollard is expected to hold the rate, taking, like many, a cautious approach.
Post a Comment
Before commenting, please take the time to read our moderation guide
(Won't be published)
Primary Industries Minister Nathan Guy says New Zealand meat...
The price of gold is trying to rally this morning, after ste...
Prime Minister John Key is playing down concerns that delays...
Yahoo is buying Tumblr for US$1.1 billion as CEO Marissa May...
Govt officials now admit they don't actually know why China ...
Copyright © 2013 MediaWorks TV. All Rights Reserved.