NZ Industry expects to take fall out from war in its stride

By NZPA

Tuesday 18th March 2003

The world is bracing itself for a United States-led war on Iraq, but New Zealand industry and business expect to take the fall-out in their stride.

War would not lead to a "huge drop-off in (export) business", TradeNZ market services general manager Jack Stephens said today.

However, he expected a "cooling off" period if Iraqi president Saddam Hussein was toppled.

"From our point of view we've been through situations like this before.

"For us it's... about keeping markets in the Middle East going." Even before US President George W Bush firmed up the prospect of war by issuing Saddam and his sons with a 48-hour ultimatum to leave Iraq or face the consequences, equities markets around the world rallied because of greater certainty.

Markets are betting on a short, sharp conflict.

These factors have also contributed to a drop in the retail price of petrol, reversing recent price increases.

The Meat Industry Association (MIA), Enza and Fonterra are planning for business as usual if there is another Gulf war.

MIA executive director Brian Lynch said he expected a war in Iraq would cause little disruption to "normal" trade.

"Certainly that was the experience in 1991," he told National Radio today.

But if the conflict spread to neighbouring countries, trade would be seriously hit , he said.

Fonterra, New Zealand's biggest company and main dairy exporter, said it would conduct business as usual.

Enza, the country's biggest pipfruit marketer, also expected little initial impact on trade.

"We don't have a direct trading relationship with Iraq and we never have, out business is more focused around Saudi Arabia and some of the Gulf states," Enza general manager international Clive Durand told National Radio today.

"It is possible that there may be some disruption to sales activity, we're not aware of that at this stage."

As the prospect of war increased, the New Zealand dollar dropped almost half a US cent to below US55c as the US dollar surged against all currencies.

Crude oil prices that had risen 20 percent this year on fears a war would disrupt supplies in the Middle East fell nearly a dollar a barrel today.

BP and Shell dropped their petrol and diesel prices in New Zealand by three cents a litre to $1.129 per litre for 91 octane, $1.179 for 96 and 72.9 cents for diesel.

Caltex and Mobil had also dropped their prices.

"What happens next to prices depends on what happens in the Middle East, but motorists should prepare for a lot of volatility," BP managing director Peter Griffiths said.

The country's tourism industry expected visitor numbers to drop in the event of a war.

But it was confident t ourism would bounce back.

Lincoln University tourism professor David Simmons said New Zealand was seen as a safe destination.

However, a downturn following a war could last at least two years, Tourism Industry Association chief executive John Moriarty said.

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