KEY POINTS:
Share prices may be falling but forecasts of the global economy have been moving in the opposite direction.
"Beneath the turbulence which has recently visited the capital markets there exists a mostly healthy and resilient world economy, which has adapted well to significant shocks this decade, not least a trebling of oil prices," said UBS chief economist Larry Hatheway.
The consensus forecast for economic growth among New Zealand's 20 largest trading partners was revised upward last month, from 3.6 to 3.7 per cent for this year and from 3.7 to 3.8 per cent for next year.
The IMF also recently revised up its forecast for world growth next year to 5.2 per cent from 4.9 per cent in April.
Falling share prices can affect the real economy by encouraging investors exposed to the market to pull in their horns, spend less and increase savings.
In New Zealand's case, however, because so many large enterprises are foreign-owned, farmer-owned or state-owned the sharemarket's capitalisation equates to only around 40 per cent of gross domestic product, compared with between 120 and 140 per cent in the United States, Australia and Britain.
NZX chief executive Mark Weldon recently criticised the Reserve Bank for ignoring the local sharemarket in appraising the state of the economy for its quarterly monetary policy statements.
