The outlook for the New Zealand economy and financial system has improved in the past six months as international conditions have stabilised, but some risks and challenges remain, Reserve Bank Governor Alan Bollard said today when releasing the Bank’s November 2009 Financial Stability Report.
“Financial market strains have eased, equity markets have mounted a recovery and confidence has improved. Economic forecasts are now tending to be revised upwards rather than downwards. However, global recovery has been fuelled by stimulatory fiscal and monetary policy settings which cannot be kept in place forever. Also, the global banking system remains vulnerable to further shocks.”
I am pleased that Dr Bollard has acknowledged that the markets remain vulnerable.
Some comments however would not be received well by the Real Estate industry who have been looking forward to a recovery and a continuation of the mini boom that many areas have been experiencing.
Dr Bollard said “…To assist this we need to ensure there is no return to a debt-fuelled housing cycle, which would likely bring with it further exchange rate pressure and erosion of competitiveness.”
His comment “”The banks nevertheless remain very cautious in their credit and funding decisions. While generally supporting this approach, we have continued to emphasise that the banks should not overly restrict lending to the business sector.” which is great news for business owners however I doubt the lending institutions will do much about making funds easier to access for business owners.
