New Zealand economy recovering faster than expected
Sydney, Australia, Dec 16 (efe-epa).- The economy of New Zealand, where the government implemented an early and strict response to the Covid-19 pandemic, is recovering faster than expected, according to an end-of-year Treasury Ministry report released Wednesday.
“Although the contraction in June quarter GDP was the sharpest on record, it was less severe than expected, suggesting that the effects of alert level restrictions on economic activity are smaller than previously assumed,” the Half-Year Economic and Fiscal Update 2020 report said.
Between April-June there was a 12.2 percent contraction of the Gross Domestic Product (GDP), the sharpest fall on record, although according to Treasury data, the July-September quarter is expected to register a 10.5 percent growth.
The unemployment rate is forecast to peak at 6.9 percent by the end of 2021, although this is less than the 7.8 percent predicted before the October elections, where Prime Minister Jacinda Ardern’s Labour Party swept the polls.
The report also highlights that the deficit for the 2020/21 fiscal year, which ends June 30, will be NZ$10.1 billion ($7.16 billion), which is below forecast, as well as improvements in tax revenue, although net debt will increase to 45.6 percent of GDP by 2023-24, dropping to 45.5 percent the following year.
Finance Minister Grant Robertson said in a statement that the economy next year is expected to outperform comparative regions such as the Eurozone, the United Kingdom and Japan.
“Global economic activity is expected to continue to recover over the rest of the forecast period, although the pace of recovery is likely to be uneven as countries contend with renewed virus outbreaks and the resulting containment measures,” Robertson said.
He also warned that “ongoing trade and geopolitical tensions, in particular tensions between China and the United States, have the capacity to affect growth and lead to higher levels of volatility.”
New Zealand, which closed its borders to curb the pandemic and ordered one of the strictest lockdowns in the world in March when it only had around 50 cases, has accumulated 1,744 confirmed Covid-19 infections and 25 deaths. EFE-EPA