2009 Job Summit
World Recession & How We Cope
Alan Bollard, Governor
Reserve Bank of New Zealand
27 February 2009
The biggest destruction of
global wealth ever?
Value loss
(est. $US)
Credit-related losses
$2 trillion
Equity Markets
$30 trillion
Housing
$4 trillion
Lost output
$3 trillion
THE RESERVE BANK OF NEW ZEALAND
Trading partner growth slows
QPC
2.0
Asian
Crisis
1.5
Financial
Crisis
Tech
Sars
Bubble
1.0
0.5
0.0
97
98
99
00
01
02
03
04
05
06
07
08
09
-0.5
-1.0
-1.5
THE RESERVE BANK OF NEW ZEALAND
Trading partner growth slows
QPC
2.0
Asian
Crisis
1.5
Financial
Crisis
Tech
Sars
Bubble
1.0
0.5
0.0
97
98
99
00
01
02
03
04
05
06
07
08
09
-0.5
-1.0
-1.5
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
…but we don’t escape unscathed
GDP
104
102
Australia
100
US
98
UK
96
Japan
94
Dec-07
Dec-08
Dec-09
Dec-10
THE RESERVE BANK OF NEW ZEALAND
…but we don’t escape unscathed
GDP
104
102
Australia
100
New Zealand
US
98
UK
96
Japan
94
Dec-07
Dec-08
Dec-09
Dec-10
THE RESERVE BANK OF NEW ZEALAND
Domestic credit growth
APC
25
20
Agriculture
Business
15
10
Household
5
0
2004
2005
2006
2007
2008
THE RESERVE BANK OF NEW ZEALAND
2009
Intended Investment & Employment
Net %
30
Employment
20
10
0
Investment
-10
-20
-30
-40
-50
00
01
02
03
04
05
06
07
08
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….
THE RESERVE BANK OF NEW ZEALAND