2009 Job Summit World Recession & How We Cope Alan Bollard, Governor Reserve Bank of New Zealand 27 February 2009

The biggest destruction of global wealth ever? $3 trillion Lost output $4 trillion Housing $30 trillion Equity Markets $2 trillion Credit-related losses Value loss (est. $US)

Trading partner growth slows Asian Crisis Tech Bubble Sars Financial Crisis

Trading partner growth slows Asian Crisis Tech Bubble Sars Financial Crisis

Lower growth world must adjust Consumption, currencies Reserves Savings, exports Currencies

New Zealand has strengths… Past strong growth, low unemployment Flexible product and labour markets Floating exchange rate & hedging Responsive monetary policy Strong government accounts Sound banking system

Past strong growth, low unemployment

Flexible product and labour markets

Floating exchange rate & hedging

Responsive monetary policy

Strong government accounts

Sound banking system

… but we don’t escape unscathed

… but we don’t escape unscathed New Zealand

Domestic credit growth Agriculture Business Household

Intended Investment & Employment Investment Employment

How we cope New Zealand has some strengths but also vulnerabilities We will play our role Banks must also play a key role You will all be affected. We want to hear your ideas….

New Zealand has some strengths but also vulnerabilities

We will play our role

Banks must also play a key role

You will all be affected. We want to hear your ideas….