The New Zealand Economy: Into the Hole

Image via Wikipedia"The earthquake that struck Christchurch two weeks ago was not only a national catastrophe for New Zealand. It is also becoming clear how devastating it is to the Kiwi economy."

"Across the industrialised world, there is one country that shows a debt profile similar to the so-called PIGS countries, and that is New Zealand. Over the past decade, New Zealand’s total overseas debt has risen steeply. In December 2000, it stood at 109 per cent of GDP. Ten years later total debt had reached 132 per cent, while NZ net debt stood at 85 per cent of GDP."

I would concur with the writer of this article in that all bets are off as to a possible New Zealand recovery this year. The issue of debt and indebtedness covered here is serious in itself but what is perhaps more worrying is the comment

"For the PIGS, at least, there was a safety net provided, thanks to European guarantees underwritten mainly by German taxpayers. Should New Zealand’s troubles get worse, who will Kiwis turn to?"

They could turn to the Aussie's but it would come with a very high price:  loss of their independence.

From the Australian Business Spectator

See New Zealand is in a dangerous debt spiral (free sign up required to read).