New Zealand PM John Key To Face Challenge Of Chinese Economic Slowdown In Third Term
National Party's John Key remains as New Zealand's prime minister after securing the country's first majority government since 1996. According to reports, Mr Key's party won a third consecutive term after the general elections on Sept. 20. The prime minister relied on the country's economic growth in securing his re-election bid amid controversies that were revealed in the heat of the election campaign.
Under the Key government, New Zealand was able to rise out of the global financial crisis, reports said. The country profited from rising immigration and construction projects in Auckland and Canterbury. Growth in dairy exports was also observed in recent years.
With a promise to maintain New Zealand's strong economic performance, slowing growth in China threatens to challenge the government's positive outlook and fiscal discipline. Despite having a small economy, New Zealand has outperformed majority of the economies of developed nations with an annual growth rate of 3.9 percent in the second quarter of the year. The rate is said to be New Zealand's fastest in 10 years.
Economists expect a moderate economic growth in the country as New Zealand is expected to feel the impact of increasing interest rates and strong local currency. A slowdown in China's economic growth may cause problems to New Zealand. China is currently the country's biggest trading partner. If demand for agriculture exports is reduced in China, it will have a significant effect to New Zealand's economy.
In a report by the Guardian, Deutsche Bank New Zealand chief economist Darren Gibbs said how much China's economy is slowing remains unclear. The Key government has vowed to maintain New Zealand's current economic policies. However, Gibb believes Mr Key's plans to "balance the books" beginning 2015 may be affected by external factors.
Gibbs said the National Party is committed to its goal of achieving a surplus, but it would be difficult to strive for extra. In August, the government reduced its economic growth forecast to 3.8 percent from 4 percent. Budget surplus projections were also cut to NZ$500 million each year to 2018.
Mr Key has confirmed National will move to liberalise New Zealand's jobs market. Reports said the new push is for labour market flexibility.