Well, that escalated quickly!

From a few concerns about the effects on Chinese tourism in late January to a full-blown pandemic and lockdown in New Zealand, the COVID-19 crisis has evolved rapidly over the last two months. We communicate just how quickly the economic ramifications have unfolded and examine how things might play out for the economy over the next 1-2 years.

Implications of COVID-19 on international travel

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.

Assessing the impact of the COVID-19 outbreak

The emergence of a new coronavirus strand, COVID-19, has potentially upended both the global and domestic economic outlook for 2020. Although it’s still too early to fully evaluate how damaging the outbreak may be, early signs are for a much larger economic hit than first anticipated, with a growing risk that New Zealand could experience a recession in 2020.

Nothing in the KiwiBuild reset to stop the housing crisis

The long-awaited reset of KiwiBuild confirms that the government still doesn’t grasp why the policy went so spectacularly wrong. When KiwiBuild was conceived back in 2012, it was easy to blame the unaffordability of housing on a lack of supply – new dwelling consents the previous year had plunged to a 58-year low of 13,236. But with consents now at a 45-year high of 35,472, it no longer makes sense to suggest that high house prices are due to a lack of construction activity. KiwiBuild remains a policy that has been formulated to treat the symptoms of a problem that the government has failed to properly diagnose or understand.

Making it rain cash: How to fix the downturn

The July 2019 Infometrics forecasts show a long, slow, slowdown is on the cards for the New Zealand economy. With lower growth on the way, it’s worth highlighting some of the options that are available to New Zealand to combat the slowdown along with the opportunities and challenges of these options.

Sounding the alarm!

Since the Reserve Bank surprised markets with its shift towards an easing bias, the outlook for interest rates has been a constant source of speculation. But the timing of the shift in stance was curious – in our view, nothing fundamental had changed, and the Reserve Bank is sending out the entire fire brigade to rescue a kitten from a tree.