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NZ Economic Update

Rabobank Food & Agribusiness Research

NZ Cold Storage Assoc. Conference18th August 2014

2NZ Cold Storage Assoc. Conference August 2014

Quiz question

One more to start the day...

• Who was the ancient Greek God / Goddess of agriculture?


Status of the Global Economic Recovery

Source: IMF & Rabobank, 2014

Growth in global importsGlobal GDP growth by country/region

Source: WTO & Rabobank 2014

Euro area

United States

Japan ASEAN-5

China-2

-1

0

1

2

3

4

5

6

7

8

9

102011 2012 2013 2014f 2015f

An

nu

al G

DP

gro

wth

(%

)

2009 2010 2011 2012 2013e 2014f-20

-15

-10

-5

0

5

10

15

20

25

Developed Developing

An

nu

al ch

an

ge (

%)


Lingering doubts... The Income vs. Wealth effects

Source: U.S. Federal Reserve & Rabobank, 2014

U.S. Federal Reserve Quantitative easing... is easing!

0.0

500,000.0

1,000,000.0

1,500,000.0

2,000,000.0

2,500,000.0

3,000,000.0

3,500,000.0

4,000,000.0

4,500,000.0

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

US Federal Reserve Security Holdings S&P 500 (RHS)

Valu

e (

US

D t

rillio

n)

Index v

alu

e


Steady recovery in NZ Economic Activity

Source: Statistics NZ & Rabobank, 2014

Private vs. Public Sector Contributions, Q1

GDP growth


Mar

-03

Mar

-04

Mar

-05

Mar

-06

Mar

-07

Mar

-08

Mar

-09

Mar

-10

Mar

-11

Mar

-12

Mar

-13

Mar

-14

-4%

-2%

0%

2%

4%

6%

8%

Annual change (

QoQ

)

-2

0

2

4

6

8

10

12

14

162012 2013 2014

Annual change (

% Q

oQ

)


But the government has played a critical role...

Source: Roy Morgan & Rabobank, 2014

NZ Government Confidence Rating

2008

2009

2010

2011

2012

2013

2014

0

20

40

60

80

100

120

140

160

180

Index v

alu

e


Kiwis are migrating home, plus a bunch of others!


Net permanent migration to NZ

Jun-0

3

Jun-0

4

Jun-0

5

Jun-0

6

Jun-0

7

Jun-0

8

Jun-0

9

Jun-1

0

Jun-1

1

Jun-1

2

Jun-1

3

Jun-1

4

-4000

-3000

-2000

-1000

0

1000

2000

3000

4000

5000

NZ citizens from Australia All citizens from all countries

Net

mig

rati

on

(p

ers

on

s)


Industry contributions to the recovery


Bank lending to select sectorsIndustry breakdown of GDP by select sector

Source: RBNZ & Rabobank, 2014

Agricu

lture

F,B&T

Manuf

actu

ring

Const

ruct

ion

Logi

stics

Fina

ncia

l Ser

vice

s

Health

Car

e-15%

-10%

-5%

0%

5%

10%

15%

20%

Q1-2012 Q1-2013 Q1-2014

Annual change (

QoQ

)

Jun

2004

Feb

2005

Oct 2

005

Jun

2006

Feb

2007

Oct 2

007

Jun

2008

Feb

2009

Oct 2

009

Jun

2010

Feb

2011

Oct 2

011

Jun

2012

Feb

2013

Oct 2

013

Jun

2014

-10

-5

0

5

10

15

20

25

Business Housing Agriculture

Annual change (

% M

oM

)


Robust recovery in the jobs market


Employment growth by typeNZ unemployment & labour force participation


Jun-0

4

Jun-0

5

Jun-0

6

Jun-0

7

Jun-0

8

Jun-0

9

Jun-1

0

Jun-1

1

Jun-1

2

Jun-1

3

Jun-1

4

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Full-time Part-time

Annual gro

wth

(Q

oQ

)

Jun-0

4

Jun-0

5

Jun-0

6

Jun-0

7

Jun-0

8

Jun-0

9

Jun-1

0

Jun-1

1

Jun-1

2

Jun-1

3

Jun-1

4

0

1

2

3

4

5

6

7

8

64

65

66

67

68

69

70

Unemployment Labour Force Participation (RHS)

Un

em

plo

ym

en

t ra

te

Part

icip

ati

on

rate


So what’s got the RBNZ going? ... Wages & Inflation


‘Tradeables’ vs. ‘Non-tradeables’ CPIWage & Consumer price growth


0

1

2

3

4

5

6

0

1

2

3

4

5

6

7

8

9

10Labour cost index (RHS)Headline CPICPI excl. 'volatile items'

An

nu

al ch

an

ge (

% Q

oQ

)

An

nu

al ch

an

ge (

% Q

oQ

)

Jun-0

8

Dec-0

8

Jun-0

9

Dec-0

9

Jun-1

0

Dec-1

0

Jun-1

1

Dec-1

1

Jun-1

2

Dec-1

2

Jun-1

3

Dec-1

3

Jun-1

4

0%

1%

2%

3%

4%

5%

6%

Tradables Non-tradables

An

nu

al ch

an

ge (

QoQ

)


Household are feeling good... but are still a bit careful


NZ & AUS Consumer SentimentNZ Retail Trade

Source: Westpac, & Rabobank, 2014

Jun-0

3

Jun-0

4

Jun-0

5

Jun-0

6

Jun-0

7

Jun-0

8

Jun-0

9

Jun-1

0

Jun-1

1

Jun-1

2

Jun-1

3

Jun-1

4

-2%

0%

2%

4%

6%

8%

10%

12%

14%

Core industries total

Food and beverage services

Supermarket and grocery stores

An

nu

al g

row

th (

% Q

oQ

)

Aug-0

4

Aug-0

5

Aug-0

6

Aug-0

7

Aug-0

8

Aug-0

9

Aug-1

0

Aug-1

1

Aug-1

2

Aug-1

3

Aug-1

460

70

80

90

100

110

120

130

140

NZ

Ind

ex v

alu

e


Foreign trade

Source: ANZ & Rabobank, 2014

Commodity pricesNZ Commodity Price Index


-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

70

80

90

100

110

120

130

140

150

Annual change (LHS) Index value

An

nu

al ch

an

ge (

MoM

, 3-m

ma)

Ind

ex v

alu

e (

July

-2009 =

100)

Jun-0

9

Dec-0

9

Jun-1

0

Dec-1

0

Jun-1

1

Dec-1

1

Jun-1

2

Dec-1

2

Jun-1

3

Dec-1

3

Jun-1

4

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

An

nu

al ch

an

ge (

MoM

)


Geopolitics... A fly in the ointment or... opportunity knocking?

Source: UN Comtrade & Rabobank, 2014

NZ Exports to Russia, 2013Russia – Top 20 imported products by value, 2013

Source: Statistics NZ & Rabobank 2014

Beef m

eat;

f.c.f.

Citrus

fruit

Pom

e fru

it

Froz

en fi

sh

Poultr

y m

eat;

f.c.f.

Chocolat

e

Palm

oil

0.00

250,000,000.00

500,000,000.00

750,000,000.00

1,000,000,000.00

1,250,000,000.00

1,500,000,000.00

1,750,000,000.00

2,000,000,000.00

2,250,000,000.00

2,500,000,000.00

2,750,000,000.00

3,000,000,000.00

3,250,000,000.00

Valu

e (

US

D b

illion

)

Butte

r

Mal

t ext

ract

Pom

e fru

it

Edib

le o

ffal

Aircra

ft

Frui

t nec

Alum

iniu

m

Ther

apy

appl

ianc

es

Fish

fille

ts

Med

ical

inst

rum

ents

0

20,000

40,000

60,000

80,000

100,000

120,000

Valu

e (

NZD

million)


An apple a day keeps Putin away

Source: UN Comtrade & Rabobank, 2014

Not good news if you’re a doctor in Poland!

Russia apple imports by country by value, 2013

Source: Deutsche Welle http://www.dw.de/poland-eats-apples-to-get-back-at-putin-russia/a-17824945

Poland49%

Moldova9%

China9%

Serbia6%

Be-larus3%

Azerbai-jan2%

Chile3%

Italy4%

Ar-gen-tina2%

Bel-gium3%

Other9%

http://www.dw.de/poland-eats-apples-to-get-back-at-putin-russia/a-17824945

http://www.dw.de/poland-eats-apples-to-get-back-at-putin-russia/a-17824945


Can Kiwis fly? We sure hope not!

Source: RBA, RBNZ & Rabobank, Financial Markets Research 2014

NZD & AUD historical currency movements – Last 12 months

Aug-13

Aug-13

Aug-13

Sep-1

3

Sep-1

3

Sep-1

3

Oct-1

3

Oct-1

3

Oct-1

3

Nov-1

3

Nov-1

3

Nov-1

3

Dec-1

3

Dec-1

3

Dec-1

3

Jan-1

4

Jan-1

4

Jan-1

4

Feb-1

4

Feb-1

4

Feb-1

4

Mar-1

4

Mar-1

4

Mar-1

4

Apr-14

Apr-14

Apr-14

May-1

4

May-1

4

May-1

4

Jun-1

4

Jun-1

4

Jun-1

4Ju

l-14Ju

l-14Ju

l-14

Aug-14

90

95

100

105

110

115

120AUD/USD NZD/USD

Index v

alu

e

(8-A

ug-2

013=

100)

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

Rabobank currency forecasts


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.


Quiz

Who was the ancient Greek god / goddess of agriculture

• Demeter


Food & Agribusiness Research and Advisory (FAR)

Marc SoccioSenior AnalystMelbourne, 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)

A global team of 80 analysts dedicated to delivering insights into the world’s major F&A regions

mailto:[email protected]


About the Rabobank Group

This document is issued by Rabobank Australia Limited incorporated in Australia (“Rabobank”). The information and opinions contained in this document have been compiled or arrived at from sources believed to be reliable, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. This document is for information purposes only and is not, and should not be construed as, an offer or a commitment by Rabobank or any of its affiliates to enter into a transaction. This information is not professional advice and has not been prepared to be used as the basis for, and should not be used as the basis for, any financial or strategic decisions. This information is general in nature only and does not take into account an individual’s personal circumstances. All opinions expressed in this document are subject to change without notice. Neither Rabobank, nor other legal entities in the group to which it belongs, accept any liability whatsoever for any direct, indirect, consequential or other loss or damage howsoever arising from any use of this document or its contents or otherwise arising in connection therewith. This document may not be reproduced, distributed or published, in whole or in part, for any purpose, except with the prior written consent of Rabobank. All copyrights, including those within the meaning of the Copyright Act 1968 (Cth), are reserved. Australian law shall apply. By accepting this document you agree to be bound by the foregoing restrictions.

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