It’s bad enough losing the rugby, but in 2014 Australians will have to suffer Kiwis getting uppity about their economy as well.
While our economic growth is stuck around 2.5 per cent, there’s talk New Zealand could be doing double that by the middle of the year.
For so long the poor cousins across the ditch, it’s the Kiwis’ turn to ride the China resources roller coaster, with all the fun and fear that can engender. The commodity is different but the fundamental story is much the same as the China boom that lifted Australia over the past decade.
What iron ore and coking coal did for Oz, milk powder is doing for New Zealand. Forget the clichés about New Zealanders and sheep – it’s cows that are making Kiwis feel good now, as well as the All Blacks having an undefeated year.
And they are feeling good. An ANZ bank survey this month found NZ businesses the most confident they’ve been since 1994. House prices and wages are rising and consumers are spending more – the government is expecting consumption growth of 2.8 per cent while Australia struggles to manage 2 per cent.
New Zealand’s terms of trade are at their highest since 1974, giving the average Kiwi sharply stronger buying power. It’s not so expensive for Kiwis to visit the relatives in Australia – but the land of the strangled dipthong is no longer a cheap holiday for Australians. The Kiwi dollar started the year above $1.26 to the Aussie. It’s finishing at $1.09.
Milk powder prices are up by more than 50 per cent this year and China has overtaken Australia as New Zealand’s biggest trading partner. Fonterra, the world’s biggest dairy exporter, can’t keep up with the demand and finds itself caught by its cheese and butter operations holding back overall performance.
The impact of Chinese demand for milk solids is also behind the never-ending Warrnambool Cheese and Butter takeover saga. It must sadden those who saw productive Victorian dairy farms turned over to tax-driven blue gum plantations.
But the extent of New Zealand’s reliance on a single commodity and a single customer worries some. New Zealand Herald commentator Bernard Hickey makes the point that the country’s second-largest trade partner, Australia, also is reliant on China and that Kiwis carry much more debt than when they last depended on a single market – England. He didn’t use the term “Dutch Disease”, but it was there between the lines.
Milk powder prices are up by more than 50 per cent this year and China has overtaken Australia as New Zealand’s biggest trading partner. Fonterra, the world’s biggest dairy exporter, can’t keep up with the demand and finds itself caught by its cheese and butter operations holding back overall performance.
Totally missed that. Fonterra (nz) are among the most respected suppliers of WPI powder used in weight loss supplements in the world.
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