Are you ready for the recovery?

2nd March, 2009

Prime Minister John Key told members of the LJ Hooker network a similar message at LJ Hooker's annual planning conference last month.


"Interest rates are down, the price of petrol has dropped, and if people are working, they are ok.  We are still in a strong position, because we have the products that the world wants to buy.  The risk to the New Zealand economy comes when the world stops buying things, which can lead to a significant growth in unemployment here."


John Key said that he expected interest rates to go lower in the coming months, and this, along with tax cuts, will have a positive effect on the economy.


"Private consumption drives 68 percent of the economy.  I have no doubt that things will get tough over the next 12 months, but it's important for businesses like LJ Hooker to remain confident.  The risk of recession is exacerbated by negativity, so people stop doing things.


"We know that New Zealanders love owning their own home, and there's plenty of evidence to show that you get a lot more out of home ownership than just a roof over their heads.  Home ownership provides stability and improved community links, which is important for everyone."


Dr Bollard said that past recoveries have  occurred suddenly and strongly, and New Zealand needs to remain well-positioned for such a recovery.  "This has been New Zealand's experience in the past. Households and firms should not pull down the shutters, and banks should continue to lend on sound business propositions."


Dr Bollard said large underlying structural adjustments are underway internationally.  The process of readjustment could be very rocky for exposed players, with real economic costs.  The debt build-up will take years to prune back to sustainable and prudent levels.


John Key also told LJ Hooker staff that immigration was an important part of the equation.


"This Government is pro-immigration.  If lots of people come into the country, it will stimulate the economy.  In 2002, net migration was high and the real estate market boomed.  We need to bring in the people who will make a difference:  people with the capital, skills, and motivation to contribute to our society," John Key said.