The future of the U.S. dollar: How you can leverage benefits for your organisation
Health Headlines - March 2010
The first global economic outlook report published by Deloitte Economics in 2010 focuses on how the impacts of the recession will influence the U.S. dollar in the future. As a lot of health purchasing is influenced by the U.S. dollar, we thought it was timely to point out how your expenditure could be impacted.
We are all suffering from “recession” fatigue but given the global nature of the health marketplace the findings of this report should not be ignored. Those who have been proactive in their response to change have and will continue to succeed. We would like to help equip you with the information you need to prepare a proactive response.
What will happen to the value of the U.S. dollar?
Economists throughout the globe are debating whether the U.S. dollar will increase or decrease in value. The majority view is that a lack of tight monetary policy, decreasing U.S. household and business consumption and the burst of the housing bubble will ensure that the value of the U.S. dollar will continue to decline. So far they have been right - over the past eight months the U.S. dollar has fallen in value by 15 percent.
What does this mean for your business and the New Zealand health sector?
The declining U.S. dollar has resulted in an increase in demand for U.S. exports. Given that we import most of our medical supplies and equipment, predominantly from the U.S., we should be watching the fluctuations in the U.S. dollar closely. Why? Because the value at which the U.S. dollar trades at directly impacts the price we pay for medical supplies and equipment. This in turn impacts the bottom line of healthcare businesses and the price both the government and private patients pay for healthcare. If the value of the U.S. dollar continues to decline then this could have positive implications for those who are already purchasing from the U.S. and it could change the behaviour of those who are not. If the U.S. dollar continues to decrease we could see the cost of medical supplies significantly decreasing, which would be welcomed given the recent tightening of public sector spend. However, this theory relies on the New Zealand dollar increasing, remaining stable or decreasing at a lesser rate than the U.S. dollar. However, there is a downside to the U.S dollar decreasing. It may create a retrenchment in research and development spend by U.S firms, which would decrease the rate of new heath care innovation.
How should we prepare for this change?
You can be proactive to the above news by thinking about how changes to the value of the U.S. dollar will impact you and how you can leverage the change to add value to your organisation. For example, those of you who are not already purchasing from the U.S. could look into the affordability of doing so and those of you who are purchasing from the U.S. could think of how you could best utilise potential savings. If you want to survive and prosper you need to ensure that you are informed, are thinking about how any change will impact your business and are proactively planning. This will ensure your business is running optimally and continuously meets the needs of your customers.
Please click here to view a full copy of The future of the dollar, in the 1st Quarter 2010 edition of Deloitte’s Global Economic Outlook.