Feb 25, 2016 08:34 AM EST
Bill English, Finance Minister of New Zealand, said that the country's economy can sustain low inflation as there is a possibility for the central bank to slack the borrowing costs if the situation demands. However, countries having negative or zero interest rates cannot depend too much on the central bank due to the financial crisis in the overall global market, he added.
In January, Graeme Wheeler, governor of Reserve Bank, said the government cash rate will remain at 2.5% and that the country needs additional help to sustain the downturn economy because inflation requires a long period to complete the bank's target range of 1% - 3%. The data gathered by Bloombergsaid that there is a 72% possibility for the bank to trim the interest rate within June 30.
The nation's economy is expected to widen over the following two years amid the current economic downturn globally. The country is also facing many challenges in dairy products prices and waning economy in China. The economy in New Zealand is offset by the increase in exports due to the mushrooming of comfortable houses in China that creates new chances for exports and other services like education and services.
Bill English added that the nation invested nearly $2 billion on housing subsidies and that around 60% of accommodation are backed by the government. The country had undertaken many strategies to reform the telecommunication, financial and electricity sectors in the previous 25 years. English said that it took some years for the government to understand and implement changes in each sector. Currently, the government is handling the same formulae in the housing sector also.
English continued that there is no need for the government to fasten the reform strategy in Auckland's housing sector, but still the nation need to invest huge capital to meet the growing population in the city. The government of New Zealand concentrated more on the increasing house prices as they can impact the monetary stability and macro-economy of the nation. Moreover, the government owned rentals can become very costly if the housing price continues to rise. The failure in the planning system may result in the shortage of land and higher house prices. So the country is in need of a proper planning structure for the prospect of its residents, NZ Herald quoted Bill English's speech at the Auckland Chamber of Commerce.
The finance minister also said that the investment rates in the business sector increased to $32 billion in 2015 from $31 billion in 2010. He noted that the manufacturing sector has been widening in the successive 40-month period. According to English, the country's outlook remains strong amid weak global market,Newshub reported.
The ministry under Bill English is looking forward for a stable economic condition in a period when the whole world is facing serious financial instability. The Reserve Bank of New Zealand is backing up the nation in its effort to achieve economic stability.
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