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NEW ZEALANDERS ESCAPE THEIR ECONOMIC STRAIGHTJACKET.

Tight monetary policies on the part of New Zealand's central bank literally put the nation's private sector into a straightjacket that restricted capital investment and household spending.

The bank's decision to increase the prime rate several times during the first half of 2002 contributed to a 12 percent increase in the value of the New Zealand dollar relative to its US counterpart. The stronger currency battered New Zealand's export competitiveness while making imported goods and services more attractive to local consumers. By the third quarter of this year, the value of imports was running at a 16-month high.

Expect year-on-year growth in sales of imported household goods to rise in excess of 5 percent through the first half of 2003. Meanwhile, domestic goods and services should experience gains of less than 3 percent. Demand for capital goods will remain slack during the first half of the year as the industrial sector experiences anemic sales growth both at home and abroad.
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Publication:Market Asia Pacific
Article Type:Brief Article
Geographic Code:8NEWZ
Date:Nov 1, 2002
Words:160
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