New Zealand has a strong and stable economy but we are not isolated from global issues. Some countries presently have very fragile economies and some of these are significant trading partners of New Zealand. The weakness and even failure of some global economies will have an impact on New Zealand, although it is extremely difficult to gauge the strength of that impact, as there are a lot of disparate factors involved.
Not only do some countries have significant issues to deal with, but some major global financial institutions have major issues to deal with as well.
The potential impact of failures or global recessionary forces should not be underestimated by us, but just how far reaching an impact this could have on New Zealand is really unknown. Negative impacts could be seen on any of: Housing Demand; House Prices; Employment Levels; Interest Rates; etc
While the short term nature of our lending/investments and the supporting registered mortgage over the borrower’s property may help to limit your exposure, the negative impacts described above could result in a shortfall in the loan repayment by the borrower (from a borrower default, negotiated lesser repayment amount of mortgagee sale) and you may not receive full repayment of your investment.