Finance Minister expects a strong economic recovery for New Zealand

Finance Minister expects a strong economic recovery for New Zealand
Photo by Aneta Foubíková from Pexels

Finance Minister Grant Robertson expects a strong economic recovery for New Zealand in the three months that end in September.

New Zealand dove into a steep recession after GDP dropped by 12.2% on-quarter between April to June. This came after a negative 1.4% growth in March.

New Zealand imposed a strict lockdown throughout the country in April. For several weeks, people had to stay indoors and all non-essential businesses were had to close down to help curb the spread of the virus.

Data showed that the infection rate in New Zealand is considered relatively low. New Zealand has reported 1,809 Covid-19 cases and 25 deaths.

According to Robertson, the June quarter data “was to be expected” and that economy recovered in July and August as activities gradually opened and people started going back to work. At the moment, the virus seems relatively manageable in the country.

ADVERTISEMENT

“We have seen ourselves come out of that relatively well and relatively quickly. So we are expecting the September quarter results to be strong,” he told CNBC’s “Squawk Box Asia.”

Government assistance

The New Zealand government launched a wage subsidy program that according to Robertson, has saved 1.7 million jobs. Over 13 billion New Zealand dollars ($8.81 billion) had been paid out under the program.

There will be no extension for the program unless New Zealand decides to reimpose lockdowns in the future.

“What we’re focused on now when our economy is operating in a relatively open way is supporting particular sectors where we have seen more exposure — for example, within our tourism industry,” Robertson said.

He added that there are efforts that will aid individuals who have lost their jobs and support small businesses by giving them interest-free loans.

New Zealand is preparing for an election next month which is believed to be another referendum on Prime Minister Jacinda Ardern’s governance.

Balance sheet

New Zealand’s balance sheet is still vigorous and that net debt will reach the above level, according to Robertson. The coronavirus pandemic, Robertson says, is a “one-in-100-year” impact on the global economy where all governments are seeking ways to financially support people and businesses.

“When we are all established, we will obviously have to continue to be very careful in our fiscal management,” he said. “We have got a path forward to keep debt under control and to bring it down over time.”

“But like all governments, I have to balance that with making sure we continue to invest in our public services and health and education, which is what we need particularly in a time like this. And supporting people through the uncertainties,” Robertson said.

He also said he believes in the capability of the country to face more shocks to the economy.

ADVERTISEMENT