SHAREMARKET FALL DOES NOT REFLECT POSITIVE ECONOMIC INDICATORSTreasurer
The current volatility in the New Zealand sharemarket does not reflect the positive economic indicators in the New Zealand economy, Treasurer Winston Peters said today.
"I have to concur with what many commentators are saying about a sizeable over reaction in the New Zealand sharemarket to what has happened on overseas markets.
"The market volatility we are currently seeing happens from time to time, but it does not change the medium-term outlook which is bright.
"New Zealand's economic growth is forecast to accelerate over the next 12 to 18 months and is being driven by fundamentals unaffected by current international uncertainty. These fundamentals include easier monetary conditions, tax reductions from 1 July 1998 and additional government spending," said Mr Peters.
The overall global growth environment is likely to remain favourable for New Zealand, even if weaker short-term growth prospects in parts of Asia mean slower export growth to some of those markets, he added.
Mr Peters noted that that the Government has in place a clear, medium-term policy framework.
"This means New Zealand is well-placed to ride out any short-term market volatility. Monetary policy is clearly directed at maintaining low inflation and the Government continues to run surpluses and repay debt," he said.
Mr Peters said the Government doesn't plan to be distracted from day-to-day market movements but will focus on continuing efforts to enhance growth.