Market Review: London April 2009 Commentary

The Hare and the Tortoise?
Economic conditions in New Zealand and Australia are substantially ‘less bad’ than in much of the Northern Hemisphere currently.

There does not yet seem to be the acute level of financial and economic distress visible that we can see in the US and parts of Europe, despite the fact that both New Zealand and Australia were enthusiastic participants in the global credit boom and the fact that both countries relied to a very great extent on inflows of foreign funding to finance their respective domestic credit booms.

Given that many of the other countries which also employed high levels of foreign financing for their domestic credit booms have since fallen by the wayside in the current global slump (Iceland being the most extreme example), the resilience of the Antipodean economies is remarkable.

Intriguingly, we find that both countries have been able to continue to tap international credit markets remarkably successfully over recent months, although no one is quite sure why this has occurred.