The markets were thrown into turmoil this morning with the unexpected, and unprecedented, joint OECD/IMF/Federal Reserve announcement that the recession ended yesterday at 3.12pm GMT.

Clearly caught on the hop, market players burnt the midnight oil as they juggled their strategic holdings and revised their profit forecasts for the coming year.

And officials were convened in an emergency session of the Economic Response Unit (ERU) in the Beehive bunker.

“Clearly, we were not ready for this announcement, as we had not expected the recession to end until early next year. All our planning was based on this expectation, so clearly our response now will have to be modified”, said the ERU head and Chief Economic Advisor Professor Econoh Miste.

However, some were more scathing in their comments regarding our preparedness.

“This is just the worst-case scenario,” said tourism operator Mr Sqee Slowpe.

“We could have done with this announcement a few weeks ago. What this means is that the country’s biggest export earner has to wait another six months before we can cash in on this recovery. It’s just not good enough.”

And Skills and Training Chair Ms Polly Tek, also thought the timing was all wrong.

“Right in the middle of term time, this just doesn’t help. Such an announcement was needed later, not earlier. While the announcement is welcome, this timing is just disruptive. These international organisations just need to consider the impact more deeply, before they go off and make these ad hoc announcements.”

Similar concerns were voiced by kiwifruit and apple exporters, who bemoaned the end-of-season start for the recovery – “if only this was a few weeks earlier, then we would have been jumping for joy” was a common theme.

This was reflected by the glum mood of the Secretary for Exports as he emerged from the ERU emergency session.

“This is not good timing because next year’s export-earning season is likely to miss out as the recovery will push the NZ $ even higher,” Mr T Raid said.

“We just have to get these different arms of government working together more cohesively,” Secretary Raid continued.

“The export story is now going to have to quickly shift from a holding pattern to one where competitiveness and productivity goals are again at the forefront. These continuing shifts in focus are not helpful for long-term business development.”

Professor Miste was, however, quick to reject criticism that New Zealand was unprepared for the recovery and sought to calm nerves.

“We have in place a flexible response plan for the economy. Indeed, the ERU completed a very successful mock exercise in 2007, as to how our processes would respond to such surprises.”

The first action of this plan is already underway. MPs have been summoned to an emergency session where the Ministry for the Recession (MER) will be officially abolished and replaced with a reactivated Ministry for Economic Analysis (MEA).

The earlier activities of the MEA had lapsed and were replaced with the infrastructure investment and skills development focus of the MER. Now that business-as-usual had returned, and the focus on these aspects was no longer necessary, the ERU response plan has the MEA being reinstated.

It was unclear whether there would be redundancies at the now defunct MER, as many would likely return to their previous posts in the MEA.

Further, the ERU will be acting as the co-ordinating arm of government as officials prepare a range of briefings on the state of the various domestic and external markets.

Chief Ambassador to Europe, Ms Dip Lo’mat noted that markets in Europe were still sluggish despite the announcement. Nevertheless, she expected her offices to be “run off their feet as skill shortages and immigration queues will again need managing as the recovery takes hold.”

Some were more positive about the announcement. “The phone’s been off the hook all night with buyers and sellers telling us they now wish to enter the market,” said real estate advisor Dr Resi Denshell.

“There are still a few bargains out there before sellers start realising they can drive a much harder bargain, but the number of trades is set to soar. The markets will be busy again and that is always a good sign for us.”

Maori Economic Resource Enterprises (MERE) director K Matua was bemused by the fuss.

“You see, we’re not interested in the quick buck. We have been continuing to work to ensure our resource-based activities thrive. Let’s face it, the challenges facing our nation haven’t changed. The productivity challenge, the market barriers, the transport logistics, capturing the returns from our value-added, and the innovation and entrepreneurial challenges have always been with us – whether it be recession or recovery.

“But, we have our taonga and we’re here to face and stare down those challenges. Our forests, land, fish and water are all here to stay. And our work is not just to ensure that our mokopuna are here to stay, but also to lay the foundations for them to take their opportunities and lead the world in the decades to come,” said the MERE director.

And independent consultancy Research in Economics and Business Ltd (REBL) issued the following release in response to the announcement:

“There may be many who are not ready for the recovery. But it depends on the goal.
“For those interested in the quick buck, there are many who are undoubtedly ready. They will have bought short, and will now be looking for a quick sell over the next few months. Others after a quick buck will no doubt miss out.

“But for those with a much longer-term perspective, the recession should not have changed their focus. The announcement shouldn’t really divert the attention of those interested in building and developing assets for the long-term, and in improving productivity to lift New Zealand to a place where it is in control of its own destiny.

“Reaching a situation where New Zealand borrows on its own conditions (and not on those of foreign rating agencies), reaps the profits of its own endeavours, influences its own future and offers opportunities for future generations could be a visionary goal. This, though, requires slightly more than the announcement of a recovery.

“In short, New Zealand may or may not be ready for a recovery. But, arguably, of more significance is the question: is it ready to build a nation?” concluded REBL.

(Source: Berl)