But Kiwis are "well positioned" to weather a turbulent time, he says
New Zealand is “well positioned” to withstand a turbulent time as the NZ dollar drops while inflation is tipped to stay up for longer, according to Finance Minister Grant Robertson.
In the past six months, the NZ dollar dipped 19% against the US dollar and has continued to slide, now trading at about 58 point 38 cents – a slight lift on a near 13-month low that it reached yesterday morning.
Read more: First signs emerge that falling inflation is on its way
In this situation, “imported goods potentially can cost a little bit more,” while exporters were “potentially going to be able to make greater profits, but it’s a very volatile and uncertain situation,” Robertson told Morning Report.
He said the decisions the US Treasury was making on its interest rates was “leading a lot of those who speculate on currencies back to the US dollar.”
“That has an impact on virtually every currency in the world, including the New Zealand dollar,” Robertson said. “Global uncertainty and turbulence is challenging and difficult for the New Zealand economy.”
The finance minister said the nation was well positioned to take on a volatile environment.
“We’ve got low unemployment, low public debt, we’ve had reasonable economic growth over the period of COVID, and we’re as well positioned as anybody is coming out of there, but it doesn’t stop it being challenging for people,” Robertson told Morning Report. “So, we’ve got to continue to work with our exporters, our importers, work with New Zealand families and households to get through what is a turbulent time.”
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That would mean inflation rose, he said, but supply chain constraints experienced during the pandemic were now receding.
“While some of the goods that are being purchased internationally and imported into New Zealand, the price of them will go up, the price of getting them here is starting to come down, so there are some countervailing things for inflation,” Robertson said. “The Reserve Bank and others have been clear that inflation will stay higher than it has been in the recent past for a longer period of time.”
Government spending was being dragged back to the “normal” of about 30% of GDP, he said.
“We’re going to continue to work hard to make sure that we’re supporting both households and businesses with strong economic policy,” Robertson told Morning Report.
