Although the movement of people across the globe has come to a near standstill, New Zealand’s exports mean that we still have a large connection to the outside world. Revenue from goods exports are income for many New Zealanders and have thankfully been quite resilient to the effects of COVID-19. It’s hard finding cheerful good news stories during a global pandemic and subsequent global recession.
New Zealand’s swift shift towards Alert Level 1 has seen the economy regain momentum more quickly than we had anticipated in the initial stages of the pandemic. Despite a feeling of cautious optimism around the country, we believe those gains will be lost as the economic realities of COVID-19 set in, with New Zealand an isolated lifeboat amid a tempest of global mayhem.
Continued calls for infrastructure investment and shovel-ready projects have yet to be matched with actual spending, but this problem isn’t a new one. Infometrics’ analysis of international data shows that New Zealand has been investing in infrastructure at a lower rate than other comparable countries for the last 30 years.
New Zealand has almost completed a month of Level 4 lockdown, aimed at halting the spread of COVID-19. And it seems to be working! New Zealanders have endured incredibly tough restrictions, including requirements to stay home, as well as increased risks for essential workers as they ensured that New Zealand remained fed and looked after.
Our $5b international education sector is a New Zealand success story, and in recent years has become a poster child for our outward-looking, globally-connected economy. But the sector is facing a steep learning curve as it seeks to adapt to lower international student arrivals and a world that is struggling to contain the spread of a pandemic.
In 2016 a large group of international economists including four former Federal Reserve Chairs and 27 Nobel laureates made a number of recommendations on climate policy. At Infometrics we have explored the effects of a ‘tax and rebate’ policy with a detailed model of the New Zealand economy.
Comparing the number of confirmed COVID-19 cases in New Zealand to some of our key international partner economies can help us to understand how we’re tracking and what might be ahead for us. There’s no one correct chart to show how COVID-19 is affecting the world, but we hope this chart provides a different way of looking at the numbers.
New Zealand’s connections with the outside world was upended on 14 March when the Prime Minister announced a mandatory 14-day self-isolation period for all travellers arriving in New Zealand (excluding the Pacific Islands). The self-isolation requirement was a response to the escalating severity of the COVID-19 pandemic and came after the US banned European travellers for a month just days earlier. This requirement to self-isolate will be a major blow to the New Zealand economy, as the requirements will effectively halt the majority of travel in and out of New Zealand.
The COVID-19 pandemic is causing economic chaos both internationally and in New Zealand. A recession is now inevitable, and the economic ramifications of the pandemic and response will substantially change people’s livelihoods. However, New Zealand is resilient and stands ready to weather this pandemic, and there are actions that can be taken to reduce the severity of the economic blow.
The COVID-19 threat continues to loom over the economy, with a rise in international cases adding weight to the view that the impact will be longer than originally hoped. New Zealand exports continue to be under pressure, and now supply chain issues are becoming more worrying.