New Zealand Economic Forecast

New Zealand Economic Outlook

July 21, 2020

The downturn seemingly intensified in the second quarter, after the economy slumped in the first quarter at the sharpest pace in nearly 30 years due to containment measures suppressing domestic demand. Despite June’s remarkable recovery in retail card spending, April’s collapse in card transactions coupled with plunging consumer confidence in April-May spells trouble for private consumption in Q2. Moreover, notably downbeat business sentiment points to vanishing investment activity, while falling merchandise exports in April-May indicate frail external demand. Meanwhile, on 5 July the government announced it will extend until the end of the year an interest-free loan program for small businesses to sustain the recovery. In politics, opposition leader Todd Muller unexpectedly resigned in mid-July, amid polls showing Prime Minister Jacinda Ardern was likely to retain power in the September elections.

New Zealand Economic Growth

Despite the significant fiscal and monetary policy measures deployed to cushion the impact of the pandemic and the relatively fast lifting of lockdown measures, the economy is set to take a severe hit this year. A solid bounce back in H2 will crucially depend on the evolution of the health situation, which represents the main downside risk. FocusEconomics panelists project the economy to contract 5.3% in 2020, which is up 0.7 percentage points from last month’s estimate, and to grow 5.3% in 2021.

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New Zealand Facts

Value Change Date
Bond Yield1.671.20 %Dec 30
Exchange Rate0.67-1.69 %Jan 01

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