The economic leadership that New Zealand has continues to come out of the Reserve Bank, rather than this government. The Reserve Bank has sent out yet another warning about New Zealand’s exposure to debt from the dairy industry and from housing in Auckland.
It is also proposing much stronger loan-to-value ratios to be enforced. See the full report for the analysis.
Also covered by the NZHerald here:
You get a taste of it from the Governor’s comments on the first page:
The outlook for the global economy has deteriorated … Dairy prices remain low … Many farmers now face a third season of negative cash flow … Problem loan levels are expected to increase significantly in the coming year, although losses in the banking sector are likely to be absorbed mainly with profits.
Imbalances in the housing market continue to increase, contributing to financial instability risk.”
This is an economy crying out for clear leadership from the government. No, government, we really do have a housing crisis. We really do have a dairy crisis. Again, the New Zealand Reserve Bank acts while the current government is in denial.