Exports and imports hurt by US cut

Fonterra Cooperative Group Ltd, the world's largest dairy exporter, said the US credit rating cut by Standard and Poor's will increase volatility in the currency market and hurt exporters and importers in New Zealand. "We're not immune to economic volatility and I think with the downgrading of the US, it's another sign that we are in very uncertain times," chief executive officer Andrew Ferrier said on Saturday. "In uncertain times you're going to see our Kiwi dollar move around quite a bit and both exporters and importers are going to get hit by that." Fonterra, which accounts for about 40 per cent of global trade in dairy products, processes 95 per cent of New Zealand's milk and generates about one-fifth of the nation's annual export earnings, according to its website. The economy probably grew less than forecast in the second quarter, the Treasury Department said on August 1, as prices for commodity exports decline and the currency trades near a record high. Article continues below Export reliant S&P cut the US rating one level to AA+ from AAA this week for the first time while keeping the outlook at "negative". It criticised the nation's political system for failing to adequately address deficit reduction. New Zealand is relying on exports, which make up 30 per cent of gross domestic product, to buoy an economic recovery after an earthquake struck Christchurch in February, hurting spending in the nation's second-largest city.