2009 job summit world recession & how we cope alan bollard, governor reserve bank of new zealand...
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2009 Job Summit World Recession & How We Cope
Alan Bollard, Governor
Reserve Bank of New Zealand
27 February 2009
THE RESERVE BANK OF NEW ZEALAND
The biggest destruction of global wealth ever?
$3 trillionLost output
$4 trillionHousing
$30 trillionEquity Markets
$2 trillionCredit-related losses
Value loss (est. $US)
THE RESERVE BANK OF NEW ZEALAND
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
97 98 99 00 01 02 03 04 05 06 07 08 09
QPC
Trading partner growth slows
AsianCrisis
TechBubble
Sars FinancialCrisis
THE RESERVE BANK OF NEW ZEALAND
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
97 98 99 00 01 02 03 04 05 06 07 08 09
QPC
Trading partner growth slows
AsianCrisis
TechBubble
Sars FinancialCrisis
THE RESERVE BANK OF NEW ZEALAND
Lower growth world must adjust
Consumption, currencies
Reserves
Savings, exports
Currencies
THE RESERVE BANK OF NEW ZEALAND
New Zealand has strengths…
• Past strong growth, low unemployment
• Flexible product and labour markets
• Floating exchange rate & hedging
• Responsive monetary policy
• Strong government accounts
• Sound banking system
THE RESERVE BANK OF NEW ZEALAND
94
96
98
100
102
104
Dec-07 Dec-08 Dec-09 Dec-10
Japan
Australia
UK
US
GDP
…but we don’t escape unscathed
THE RESERVE BANK OF NEW ZEALAND
94
96
98
100
102
104
Dec-07 Dec-08 Dec-09 Dec-10
Japan
Australia
UK
US
GDP
…but we don’t escape unscathed
New Zealand
THE RESERVE BANK OF NEW ZEALAND
Domestic credit growth
0
5
10
15
20
25
2004 2005 2006 2007 2008 2009
APC
AgricultureBusiness
Household
THE RESERVE BANK OF NEW ZEALAND
Intended Investment & Employment
-50
-40
-30
-20
-10
0
10
20
30
00 01 02 03 04 05 06 07 08
Net %
Investment
Employment
THE RESERVE BANK OF NEW ZEALAND
How we cope
• New Zealand has some strengths but also vulnerabilities
• We will play our role
• Banks must also play a key role
• You will all be affected. We want to hear your ideas….
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