Views on 2013
Fairfax asked me a couple of weeks ago for some views on the year ahead. I didn’t quite realise that it would be presented in such an immodest way, but anyway their summary of what I said is:
In the year ahead he believes the big issue will be the US struggle to get debt under control by reducing the federal deficit.“Sadly, I see no sign of any political leadership in this direction, so believe the US dollar will continue to devalue, and this will push the New Zealand dollar close towards parity with the greenback,” he says. New Zealand’s export industry will feel the impact and while Farrar looks to a successful Trans Pacific Partnership outcome, he doubts the US will agree to meaningful reductions in trade barriers. He points also to worries that the Chinese economy may slow down. If it does, and with the US and European debt woes, 2013 could be a rough year for New Zealanders.
Domestically, the Government’s planned asset sales will be the domingating political and economic issue. “The politics are fairly easy to predict – there will be a referendum, and the result will be a vote against. The unknown is how large the turnout is – the larger the turnout, the more damaging it may be.”
The biggest factor in the year will be how successful the floats actually are.They could give vibrancy to capital markets, boast economic confidence and private savings.“If the floats are viewed as limp, or even worse are delayed further by the Supreme Court, then the Government’s economic programme will be seriously challenged.”
Farrars tips on names to watch in politics ahead: Chris Hipkins in Labour, Kevin Hague of the Greens, new National backbencher Mark Mitchell and Tracey Martin.