NewsBrief
No.41 - April 2003		TM

Year of the Goat

The Chinese "Year of the Goat" invites us to "Expect the Unexpected"!

War in the Middle East has divided traditional allies and called into question the effectiveness of the United Nations. The massive diverson of resources into the Iraq Campaign jeopardises the recovery of shaky global economies and the trans-Atlantic tensions are credited with delaying the crucial Doha round of WTO trade liberalisation negotiations seeking long-overdue market reforms.

On the "Home Front", the Second Gulf War has overshadowed informed discussion about predictions of significant slowdown in future economic growth. There is growing concern about New Zealand's increasing alienation from our traditional allies, a strategy which many believe will result in serious long term political and economic consequences. As a small, isolated global trader, New Zealand's long term economic development and future wellbeing is all too vulnerable to glacial progress with free trade reforms, rogue viruses and fractured Friendships.

Despite growth of 4.4% in 2002, (significantly better than all of our major trading partners), New Zealand business confidence is at its lowest level for almost three years. Economists note the country's nett debt is now $100 billion, despite a period of high export earnings, a 1.5% increase in immigration and predictions of a May Budget surplus of $3.5 billion. Most commentators who had endorsed the December Treasury forecast of economic growth of 2.5% for 2003, are now speculating that figure will be revised downwards in next month's Budget. The War, a steadily rising exchange rate, higher energy costs, the drought, and a likely slow down of in-bound tourists (thanks in part to the SARS virus) all contribute to a general mood of pessimism.

The local chemical industry continues to reflect the global trend towards restructuring and larger scale operations delivering better economies of scale to offset rising production and distribution costs. Despite the prospect of lower interest rates later in the year, claims persist that business compliance costs, particularly for SMEs, are outstripping any productivity gains.

Next month, controversial new Health and Safety legislation introduces up to two days' paid training per year for workplace safety representatives, instant fines for non-compliance, and formal recognition of Stress as a work related injury, making compliance increasingly complex to implement and enforce. The task of employers, particularly those running smaller, less well-resourced businesses, just got harder!