According to analysts at ANZ, New Zealand’s primary industries are an important part of the economic picture and commodity prices are generally strong at present, but rising costs are impacting returns, with finding skilled labour a particular challenge.
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“There are varying conditions across segments, and this is evident in confidence levels. High debt levels in the dairy sector are curbing market sentiment, with farmers focused on debt repayment and required investment. Meanwhile, confidence in horticulture and sheep and beef industries is strong on the back of elevated returns.”
“And so far, slowing Chinese growth is not affecting the forestry sector. That said, a slowdown in global growth is clearly evident, and there is a risk that conditions could deteriorate for primary producers, particularly if gravity comes calling for our commodity prices.”
“Global risks are clearly weighing on the RBNZ’s thinking and they have indicated that the next move in the OCR is more likely to be down.”
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