Farmers not happy
Unemployment could exceed 7pc
New Zealand's unemployment rate could skyrocket past 7 percent as the world recession bites, with little the Reserve Bank can do this morning to mitigate the distress that households will face.
Kiwis will be increasingly at the mercy of an economic whirlwind this year that has severely damaged Northern Hemisphere countries despite central bank rate cuts there. The wider economy yesterday took a $3.1 billion king hit through global dairy giant Fonterra's reduced forecast payout of $5.10 a kilogram of milksolids, well below last year's record payout of $7.90.
I’m picking that the unemployment rate is going to be much higher than 7% because it will be exacerbated by an influx of Kiwis from Australia as that country goes through its own an economic and environmental meltdown. Economically NZ is about to get pounded, my co-blogger has been pointing out that if we drop our interest rates any further then it could lead to a run on our currency as the global economy flees from our market, especially with the massive level of debt we are carrying this could be crippling and I think all the flag waving for an interest rates cut seems remarkably shortsighted. The impact of the reduced Dairy payout will have negative effects to the environment as Farmers increase the amount of cows on their farms trying to lift productivity, so the insidious damage dairy farming vomits out on the environment will actually become much more intense.