Transcript Slide 2

NZ Economic Update
Rabobank Food & Agribusiness Research
NZ Cold Storage Assoc. Conference
18th August 2014
Quiz question
One more to start the day...
• Who was the ancient Greek God /
Goddess of agriculture?
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Status of the Global Economic Recovery
Global GDP growth by country/region
10
2011
2012
2013
2014f
Growth in global imports
20
2015f
Developed
9
15
Annual change (%)
8
Annual GDP growth (%)
Developing
7
6
5
4
3
10
5
0
-5
2
1
-10
0
-15
-1
-2
Euro
area
Source: IMF & Rabobank, 2014
United
States
Japan
ASEAN-5
China
-20
2009
2010
2011
2012
2013e 2014f
Source: WTO & Rabobank 2014
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Lingering doubts... The Income vs. Wealth effects
4.5
2,200
4.0
2,000
3.5
1,800
3.0
1,600
2.5
1,400
2.0
1,200
1.5
1,000
1.0
800
0.5
600
0.0
Aug-2008
Aug-2009
Aug-2010
Aug-2011
US Federal Reserve Security Holdings
Aug-2012
Aug-2013
Index value
Value (USD trillion)
U.S. Federal Reserve Quantitative easing... is easing!
400
Aug-2014
S&P 500 (RHS)
Source: U.S. Federal Reserve & Rabobank, 2014
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Steady recovery in NZ Economic Activity
Private vs. Public Sector Contributions, Q1
7%
16
6%
14
5%
12
4%
3%
2%
1%
0%
-1%
2012
Annual change (% QoQ)
Annual change (QoQ)
GDP growth
8
6
4
2
0
-3%
-2
Source: Statistics NZ & Rabobank, 2014
2014
10
-2%
-4%
2013
Private
consumption
expenditure
General
government
expenditure
Gross capital
formation
Source: Statistics NZ & Rabobank, 2014
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But the government has played a critical role...
NZ Government Confidence Rating
180
160
Index value
140
120
100
80
60
40
20
0
Source: Roy Morgan & Rabobank, 2014
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Kiwis are migrating home, plus a bunch of others!
Net permanent migration to NZ
5000
4000
Net migration (persons)
3000
2000
1000
0
-1000
-2000
-3000
-4000
NZ citizens from Australia
All citizens from all countries
Source: Statistics NZ & Rabobank, 2014
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Industry contributions to the recovery
Industry breakdown of GDP by select sector
Bank lending to select sectors
25
20
15%
Annual change (% MoM)
Annual change (QoQ)
20%
10%
5%
0%
-5%
15
10
5
0
-10%
Q1-2012
Q1-2013
Q1-2014
-5
-15%
-10
Business
Source: Statistics NZ & Rabobank, 2014
Housing
Agriculture
Source: RBNZ & Rabobank, 2014
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Robust recovery in the jobs market
NZ unemployment & labour force participation
8
Employment growth by type
70
10%
Full-time
6
4
3
6%
68
67
66
2
1
0
65
Annual growth (QoQ)
5
Part-time
8%
69
Participation rate
Unemployment rate
7
4%
2%
0%
-2%
-4%
64
-6%
-8%
Unemployment
Source: Statistics NZ & Rabobank, 2014
Labour Force Participation (RHS)
Source: Statistics NZ & Rabobank, 2014
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So what’s got the RBNZ going? ... Wages & Inflation
‘Tradeables’ vs. ‘Non-tradeables’ CPI
Wage & Consumer price growth
4
9
7
5
4
2
1
Tradables
3
2
Non-tradables
5%
8
6
3
6%
Annual change (QoQ)
Annual change (% QoQ)
5
Labour cost index (RHS)
Headline CPI
CPI excl. 'volatile items'
10
Annual change (% QoQ)
6
4%
3%
2%
1%
1
0
Source: Statistics NZ & Rabobank, 2014
0
0%
Source: Statistics NZ & Rabobank, 2014
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Household are feeling good... but are still a bit careful
NZ Retail Trade
NZ & AUS Consumer Sentiment
140
14%
NZ
12%
130
Index value
10%
Annual growth (% QoQ)
AUS
8%
6%
4%
120
110
100
2%
90
0%
80
-2%
70
60
Core industries total
Food and beverage services
Supermarket and grocery stores
Source: Statistics NZ & Rabobank, 2014
Source: Westpac, & Rabobank, 2014
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Foreign trade
NZ Commodity Price Index
Commodity prices
50%
40%
150
140
30%
130
20%
120
10%
110
0%
100
-10%
90
3 month moving average
30%
Annual change (MoM)
40%
Index value (July-2009 = 100)
Annual change (MoM, 3-mma)
35%
25%
20%
15%
10%
5%
0%
-5%
-10%
-20%
80
-30%
70
-15%
-20%
-25%
Annual change (LHS)
Source: ANZ & Rabobank, 2014
Index value
Source: Statistics NZ & Rabobank, 2014
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2.50
2.25
2.00
1.75
1.50
1.25
1.00
Value (NZD million)
Russia – Top 20 imported products by value, 2013
0.50
0.00
Source: UN Comtrade & Rabobank, 2014
Butter
Sheep meat
Malt extract
Frozen fish
Pome fruit
Frozen beef
Edible offal
Whey
Aircraft
Cheese
Fruit nec
Molluscs
Aluminium
Hand tools
Therapy appliances
Other meat
Fish fillets
Mining machinery
Medical instruments
Photographic equip.
Beef meat; f.c.f.
Cheese & curd
Pig meat; f.c.f.
Citrus fruit
Spirits
Wine
Pome fruit
Tobacco
Tomatoes
Frozen fish
Bananas
Fresh fish
Poultry meat; f.c.f.
Animal feed
Milk & cream
Chocolate
Cut flowers
Butter
Palm oil
Soya beans
Value (USD billion)
Geopolitics... A fly in the ointment or... opportunity knocking?
NZ Exports to Russia, 2013
3.25
120
3.00
2.75
100
80
60
40
0.75
20
0.25
0
Source: Statistics NZ & Rabobank 2014
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An apple a day keeps Putin away
Russia apple imports by country by value, 2013
Belgium
Argentina 3%
2%
Not good news if you’re a doctor in Poland!
Other
9%
Italy
Chile 4%
4%
Azerbaijan
2%
Poland
49%
Belarus
3%
Serbia
6%
China
9%
Source: UN Comtrade & Rabobank, 2014
Moldova
9%
Source: Deutsche Welle http://www.dw.de/poland-eats-apples-to-get-back-at-putin-russia/a-17824945
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Can Kiwis fly? We sure hope not!
Index value
(8-Aug-2013=100)
NZD & AUD historical currency movements – Last 12 months
120
AUD/USD
115
NZD/USD
110
105
100
95
90
Rabobank currency forecasts
31-Jul-2014
+3m
+6m
+12m
NZD/USD
0.85
0.86
0.86
0.85
AUD/USD
0.93
0.92
0.90
0.86
EUR/USD
1.34
1.35
1.35
1.30
GBP/USD
1.69
1.70
1.72
1.69
Source: RBA, RBNZ & Rabobank, Financial Markets Research 2014
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In Summary!
Key takeaways
• The NZ economy has affected a robust, private sector led
recovery.
• Responsible political leadership has created the necessary
conditions for this to happen.
• Population growth provides added momentum, with more & more
people finding a reason to move to (and back to!) NZ.
• Risks to the global recovery remain, including near-term
geopolitical disruptions to F&A trade.
• Interest rates are set to stabilise for the time being as the RBNZ
assesses recent hikes and observes global markets.
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Quiz
Who was the ancient Greek god / goddess of agriculture
• Demeter
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Food & Agribusiness Research and Advisory (FAR)
A global team of 80 analysts dedicated to delivering insights into the world’s major F&A regions
Marc Soccio
Senior Analyst
Melbourne, Australia
+61 (3) 9940 8437
[email protected]
Meet the FAR Oceania research team…
Luke Chandler, General Manager
Hayley Moynihan, Senior Analyst (Dairy)
Michael Harvey, Senior Analyst (Dairy)
Georgia Twomey, Commodities Analyst
Graydon Chong, Senior Analyst (Grains & Oilseeds)
Angus Gidley-Baird, Senior Analyst (Animal Proteins)
Matt Costello, Analyst (Animal Proteins)
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About the Rabobank Group
With over 110 years of banking experience, Rabobank is the world’s leading specialist in food and agribusiness banking.
Founded in the Netherlands in 1898, by farmers for farmers, Rabobank retains its cooperative structure and founding
principles while operating in 47 countries around the world.
Rabobank is among the 30 largest financial institutions in the world, based on Tier 1 Capital with a continuing and growing
presence in Australia and New Zealand.
Rabobank Australia and Rabobank New Zealand are part of the international Rabobank Group. Rabobank Australia Limited
is a leading rural lender in Australia and takes pride reinvesting back into the local agricultural community. Rabobank
understands the cyclical nature of agribusiness and takes a long-term view of the industry, using its established network of
61 strategically located branches across the nation to service rural clients.
As well as global knowledge and local market expertise, Rabobank rural managers have a genuine understanding of their
clients’ businesses. This unique approach provides a real value-adding resource to help clients achieve their short and longterm business goals.
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www.rabobank.com.au
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