|

NZ GDP likely to take a hit due to drought crisis

FXStreet (Bali) - The Minister for Primary Industries in New Zealand, Nathan Guy, is expected to declare South Canterbury and North Otago drought areas, when he visits the rapidly depleting Opuha Dam, near Fairlie, today, notes Jamie Gray, a business reporter for the NZ Herald.

Key Quotes - via NZ Herald

Parts of Canterbury, Marlborough and North Otago are suffering from abnormally dry conditions and most of the country is drier than usual. Tony McCormick, chief executive of Opuha Water, said the dam, which has been on restrictions since December, was now just 9.5 per cent full. "We are looking very much at a scenario of nearly zero storage," McCormick said.

Irrigation will stop when there is a metre of storage left, which will be then used to augment the nearby Opihi River. "In a fortnight, we will have to turn off all irrigation," he said. "It really is an extreme climate event that we have not seen since the dam was built." The dam serves its 250 farmer shareholders, who have 16,000ha under irrigation.

For drought, or "adverse event" declarations, the Government classifies how serious the problem is and how localised it is. If the Government declares a medium-scale adverse event, much of the support made available to affected farmers will be similar to the support made to any business or family in adversity.

Under certain circumstances, drought-affected farmers can defer tax payments and assistance is available through the Rural Support Trust. Last month, Westpac said dry weather throughout much of New Zealand was likely to take a "significant chunk" out of GDP growth over the first and second quarters.

Author

Ivan Delgado

Ivan Delgado

Independent Analyst

Established in the Asian continent since 2009, Ivan studied a degree in Business at the University Pompeu Fabra (Barcelona), while also earning a postgraduate degree in Business Administration.

More from Ivan Delgado
Share:

Editor's Picks

AUD/USD picks up bids above 0.7100 after RBA-speak

AUD/USD picks up bids above 0.7100 in the Asian session on Tuesday, following hawkish comments from RBA Assistant Governor Sarah Hunter and Governor Michele Bullock. However, escalating tensions in the Middle East and the Fed's hawkish outlook remain supportive of the bullish US Dollar undertone, which could limit the pair. The crucial Trump-Xi summit is later this week and remains in focus.

USD/JPY holds small gains near 157.50 as JPY intervention risks loom

USD/JPY posts modest gains while trading near 157.50 in the Asian session on Tuesday as intervention fears help limit losses for the Japanese Yen. However, the BoJ's dovish rate hike to a 31-year high keeps JPY bulls on the back foot. Meanwhile, the US Dollar retains a bullish undertone amid the Fed's hawkish outlook and escalating Middle East tensions, providing tailwinds for the pair.

Gold  battles $4,300 amid hawkish Fed, Iran risks

Gold turns lower for the second consecutive day following a modest intraday uptick, challenging the $4,315 region, or a three-day low in the European session on Tuesday. The US Federal Reserve's hawkish outlook is seen as a key factor driving flows away from the non-yielding yellow metal.

Bitcoin pauses rally as profit-taking reaches yearly high

Bitcoin takes a breather, facing a pullback, trading below $85,500 on Tuesday after surging 6.7% the previous day. Strong institutional demand supports the bullish price action, with spot Bitcoin Exchange Traded Funds recording nearly $1 billion in inflows on Monday and Strategy adding 950 BTC to its treasury.

Energy and risk markets remain in the driver’s seat
US stock markets rallied up 2.26% (Nasdaq) yesterday with AI/tech names leading the advance. The Nasdaq even tested the all-time high reached early June. The likes of the S&P 500 and EuroStoxx50 recovered up to 1.5%. Positive risk vibes and lower energy prices supported consolidation on bond markets following the past month’s heavy losses. European yield curves bull steepened.
BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.