Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Fast And Furious: ASB Quarterly Economic Forecast - May 2020

  • NZ abruptly went into a stringent lockdown to combat health risks, prompting a huge and rapid economic response from the Government.
  • NZ comes out of stringent restrictions able to entertain the possibility of moving to ‘normal’ distancing.
  • But the hard road of economic recovery is just starting and has several levels of its own to work through.

New Zealand is emerging out of lockdown into a very different world to the one we all heralded in at the start of the year, and although for us the health crisis may be easing, the economic one is only just starting.

The latest ASB Quarterly Economic Forecast shows by responding to the fast-breaking crisis at a furious pace, New Zealand is hopefully in a better position to return to normality sooner than other countries. However, ASB chief economist Nick Tuffley warns this may still be a way away.

“Economically, we see the country as going through three stages: surviving the crisis, adapting in a period of transition, reimagining itself into the new normal,” says Tuffley.

“The crisis period is where we are now: surviving the impacts of the lockdown and reopening when ongoing restrictions, behavioural changes, and potential for spending caution mean revenue streams are highly uncertain. It has been – and will continue to be – a time of swiftly making hard decisions,” says Tuffley.

According to the ASB Quarterly Economic Forecast, the transition period could take 12 to 18 months, with a number of uncertainties likely to be resolved during this time. Tuffley says persistent and permanent shifts in behaviour will become more apparent, and this will be a period in which being adaptable and flexible will be important.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

“Finally, New Zealand will reimagine itself in what will become the ‘new’ normal. Supply chains are likely to focus more on reliability and resilience, favouring local sources more, even if at higher cost.

“Trade will be more focused on goods and on services that are more provided by remote and less reliant on people movements. The importance of fully leveraging technology has been starkly highlighted, and will change how we shop, work, and influence where we live,” says Tuffley.

International Outlook – COVID-19 causing a sharp global recession

The COVID-19 pandemic has severely disrupted economic activity over the early months of 2020, pushing the global economy into recession. The magnitude of economic decline over 2020 will likely depend on each country’s ability to contain and manage the outbreak. NZ is on track to continue to gradually lower the Alert Level (sooner rather than later, hopefully) which may even see economic activity recover faster than we have pencilled in over 2020.

NZ’s key trading partners are overall expected to fare a little better than the global average. The consensus sees growth in NZ’s trading partners bottoming out around -2.5% for this year, before a rapid recovery to nearly 6% in 2021.

“It’s too early to judge how actual global activity is running relative to our expectations. Amongst other things, we’ll be looking at China for a guide to how quickly economies can recover post-lockdown. China was obviously first to be hit by COVID-19 and looks to be coming out the other side in a stronger position than most - we expect Chinese GDP growth of 1.5% annually for 2020.

The latest ASB Quarterly Economic Forecast will be available online at https://www.asb.co.nz/documents/economic-research/quarterly-economic-forecasts.html

Other recent ASB reports covering a range of commentary can be accessed at our ASB Economic Insights page: https://www.asb.co.nz/documents/economic-insights.html

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 
GenPro: General Practices Begin Issuing Clause 14 Notices

GenPro has been copied into a rising number of Clause 14 notices issued since the NZNO lodged its Primary Practice Pay Equity Claim against General Practice employers in December 2023.More

SPADA: Screen Industry Unites For Streaming Platform Regulation & Intellectual Property Protections

In an unprecedented international collaboration, representatives of screen producing organisations from around the world have released a joint statement.More

 
 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.