Bishop Chris: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeBishop Chris: Oral Questions — Questions to Ministers[Sitting date: 21 July 2015. Volume:707;Page:5104. Text is incorporated into the Bound Volume.]2.CHRIS BISHOP (National)to the Minister of Finance: What reports has he received on the international economy and its effect on the New Zealand economy?Hon BILL ENGLISH (Minister of Finance):I have seen a number of reports including Treasury’s Monthly Economic Indicators. As members will be aware there have been continued drops in the international dairy price recently. It is now 40 percent lower than the recent peak in early March. For the dairy sector times are turning out to be tougher and they may be for longer than industry experts expected. However New Zealand’s automatic stabilisers in the form of flat to falling interest rates and a reducing exchange rate against the US and Australian dollar will help cushion the effects of a dairy price decline and increase the profits of other export sectors where prices are holding up.Chris Bishop: What matters of economic relevance for New Zealand did he observe on his recent visit to China?Hon BILL ENGLISH: Both political leaders and business operators in China remain reasonably positive about the economic outlook. China’s growth does appear to be slowing more so probably in investment in infrastructure than in consumer demand where rising wages and a continued demand for high-quality food products would tend to underpin more growth in New Zealand rather than less. It is good news for New Zealand to see China officially moving from an investment-driven economy to more emphasis on consumption driving growth.Chris Bishop: How does New Zealand’s current economic performance compare with other developed economies?Hon BILL ENGLISH: New Zealand faces some of the same headwinds as other developed economies—2.6 percent GDP growth in the year to March compares with an average of about 2 percent growth across the OECD. Tourism for instance is growing reasonably strongly because the New Zealand dollar has dropped relative to the US dollar and this last year we have had 3 million visitors a 7 percent increase on the previous year indicating there is sufficient economic growth and confidence in other developed economies to supply more tourists to New Zealand.Chris Bishop: How well placed is the New Zealand economy to deal with any potential slow-down in the rate of economic growth should international conditions worsen?Hon BILL ENGLISH: In the light of recent commentary on the economy that is a very good question. The Reserve Bank’s latest forecast just 6 weeks ago incorporated reductions in dairy prices and at the same time forecast growth of over 3 percent in the next few years. Recent data indicates that those forecasts may come back a little but we remain on track for sustained moderate growth. As I have indicated the exchange rate has dropped considerably cushioning the effect of lower dairy prices and interest rates are now flat to falling rather than rising as was expected just 3 or 4 months ago. That will help households that may face some headwinds from lower dairy prices.