Things are generally looking better for New Zealand. Consumer, business, and forecaster expectations of growth have improved, our trading partners are stabilising, and financial markets are functioning. Yay.
But one piece of data that leaves me a little cautious is the money stock data. The broadest measure of the money stock (M3) declined 2% on a year earlier in November. This was the largest decline on record (going back to 1960).
Furthermore, following this release the New Zealand dollar has climbed sharply.
If the declines in the money stock are sustained, and the higher dollar is also sustained, there is one clear interpretation – market expectations of demand driven deflation.
Of course, this data is volatile and rising commodity price expectations and the such can be used to explain the change in the dollar, but …
3 comments
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Michael Cowell says:
January 12, 2010 at 12:15 am (UTC 12 )
I know that New Zealand economy are continously growing. And many other nations are now planning to put or set up business.
oyun turnuvasi says:
January 13, 2010 at 7:20 am (UTC 12 )
What about Turkey?
Ted40110 says:
January 20, 2010 at 7:30 pm (UTC 12 )
Sorry, I don’t quite follow your comment in relation to Turkey.
TVHE » NZ inflation expectations end of 2009 says:
February 3, 2010 at 7:02 am (UTC 12 )
[...] conjunction with the negative annual growth in the money stock during the close of 2009 (note our caution) it looks like inflation isn’t a clear and immediate concern … Categories: New [...]