SINGAPORE – New Zealand is forecasting strong returns to its economy in the three months ending in September, Finance Minister Grant Robertson said on Friday.
The country plunged into a deep recession for two consecutive quarters of negative growth, with GDP falling by 13.4 per cent in the quarter between April and June, largely in line with economists’ expectations of 18.8 per cent in the Reuters poll. Which recorded a negative 1.4% growth in the March quarter.
Between April and May, New Zealand imposed a nationwide strict lockdown for several weeks to slow the spread of coronavirus. This meant that most people had to stay indoors and all non-essential businesses were shut down. Infection rates have remained relatively low in the country of about 5 million people, with 1,809 cases reported and 25 deaths.
Robertson told CNBC’s “Squawk AsiaX” that the June quarter data was “expected” and that business resumed in July and August and resumed when people returned to work. The virus appears to be relatively under control in the country at this time.
“We’ve seen ourselves coming out relatively well and relatively quickly. So we expect the September quarter results to be strong,” he said.
Wage subsidy
To help businesses get out of the national lockdown without letting businesses down, the New Zealand government introduced a wage subsidy program that told Robertson that 1.7 million jobs were secure. Reports say more than 13 billion New Zealand dollars ($ 8.81 billion) have been paid under the scheme.
It is not expected to move the program forward unless New Zealand is forced to use a strict level of lockdown in the future.
“While our economy is operating relatively openly, what we’re focusing on is supporting certain areas where we’ve seen more exposure – for example, in our tourism industry,” Robertson told CNBC. He explained that there are still plans to support people who have lost their jobs and to help small businesses with access to interest-free loans.
New Zealand is preparing for elections next month that could serve as a second referendum led by Prime Minister Jacinda Ardern.
Future shocks
In the run-up to the economic and fiscal reforms, the New Zealand Treasury said net debt is expected to grow in the coming years, affecting the Pacific nation’s long-term recovery. At the end of June, net debt was projected to be 27.6% of GDP and by FY2024, it is expected to reach 55.3% of GDP.
Robertson said New Zealand’s balance sheet is strong and that net debt will peak at the above levels. He explained that the coronavirus epidemic is a “one-in-100-year” shock to the global economy where all governments are looking for ways to support their people and businesses financially.
“When we are all established, we have to be very careful in our financial management,” he said. “We’ve got a way forward to keep debt under control and bring it down over time.”
“But like all governments, I have to strike a balance with the assurance that we continue to invest in our public services and health and education, which we especially need at such times. And we support people through uncertainty,” Robertson added. Saying that the country will be able to absorb more shocks to the economy.
Air New Zealand
In August Gust, New Zealand’s national carrier reported its first annual loss in nearly two decades, and reports said it planned to pull in a NZ $ 900 million (59 6,596.34 million) government loan to fight the epidemic, which has boosted global travel and tourism. Is.
Robertson said Air New Zealand is a very important part of the country’s economy and will play a crucial role in its economic development. The government plans to work with the airline in the coming months for their future status.
“Like all the airlines in the world, they are facing a huge challenge at the moment. They have started paying attention to the loans offered to support them during this period. They have taken a significant number of redundancies in the airlines.” They are changing what they are dealing with.
.
