- Some economic indicators suggest that
New Zealand is actively returning to its pre-pandemic
- Budget forecasts expect the economy to grow
at 2.9 per cent in the year ending June 2021.
central bank recently hinted at an interest rate hike as
early as next year, given the impressive recovery in the
Thanks to New
Zealand’s early success in curbing coronavirus
transmission and dedicated fiscal and monetary support, the
country has managed to withstand the disruptions of the
pandemic better than expected.
Riding on its
way to “winning the COVID-19 war”, the nation seems to
be powering out of a once-in-a-generation recession better
than its peers. In fact, some recent economic statistics
reveal that New Zealand is swiftly returning to its
As per the recently released
Government Budget, the country’s economy will revive from
the pandemic faster than previously anticipated, with a much
lower peak in the jobless rate. Budget forecasts predict the
economy to grow at a rate of 2.9 per cent in the fiscal year
ending June 2021, before touching 3.2 per cent and 4.4 per
cent in the following two years.
Treasury expects the unemployment rate to peak to 5.2 per
cent in the June 2021 quarter, before gradually falling to 5
per cent in Q2 2022 and 4.2 per cent in three years.
Previously in December 2020, the Treasury anticipated the
jobless rate to peak much higher to 6.8 per cent during the
second quarter of next year.
At the same time, the central
bank’s recent indication to increase the official cash
rate in the second half of 2021 made New Zealand one of the
first advanced countries to signal a move away from the
stimulatory settings embraced during the coronavirus
pandemic. It indicates that the central bank’s confidence
in the economic outlook is improving.
In addition to
these projections, some economic indicators are also
stirring hope and optimism over the country’s strong
recovery from the pandemic:
The recently released
figures from Statistics NZ revealed that the country’s
filled job numbers reached a new high in April 2021,
surpassing pre-coronavirus levels. There were about 2.24
million jobs in the nation in April this year, reflecting a
surge of more than 2.5 per cent from April 2020 when filled
jobs plummeted to approximately 2.18 million over the
coronavirus alert level 4 lockdown.
This ‘upbeat result’ for the labour
market was in line with the jobless rate data released early
in May, indicating a fall in the unemployment rate to 4.7
per cent in the March 2021 quarter. In a more positive sign,
the jobless rate for women declined from 5.3 per cent to 4.7
per cent, matching the level with men.
rate of unemployment is still above pre-COVID-19 levels, the
labour market is proving itself to be far more resilient
than was initially expected after the country’s first
lockdown. The ongoing vaccination programme and potential
re-opening of international borders are further expected to
underpin the recovery in the labour market while bolstering
hiring and business confidence.
Spending Continues to Shine
spending appetite of consumers remaining buoyant, New
Zealand saw a higher-than-expected rise in retail sales in
the March 2021 quarter. The latest data from Statistics NZ
shows that retail sales marked a Q-o-Q rise of 2.5 per cent
last quarter, following a 2.6 per cent decline in the
December 2020 quarter. The figures exceeded analysts’
expectations of about 4.4 per cent
Notably, the retail sales results
emerged stronger despite the loss of international tourists
during the summer months. The country seems to be observing
a diversion of spending earlier earmarked for overseas
holidays, offsetting the drag from the absence of
international tourists. Besides, the recent figures reflect
the underlying strength of the nation’s economy, which is
actively recovering from pandemic
Trade Surplus Gaining
The latest data from Stats NZ
demonstrated that the country recorded a trade surplus of
NZ$388 million in April 2021, considerably higher than the
upwardly revised NZ$39 million trade surplus seen in March.
While the value of total goods exports increased by NZ$65
million compared to April 2020, the value of imports surged
by NZ$1.0 billion.
Although April 2021 trade surplus
was considerably lower than the NZ$1.4 billion trade surplus
seen at the same time last year, it remains closely in line
with the figures witnessed during the pre-pandemic stage.
Besides, one need not neglect that the last year’s data
reflected a sharp drop in imports due to domestic and
international travel restrictions and widespread business
closures, widening trade balance.
remains over the potential re-opening of overseas borders,
both imports and exports are likely to improve once the
normalcy returns in international trade. The active progress
of the COVID-19 vaccination programme will be instrumental
towards this end.
Overall, the New
Zealand economy seems to be in an incredibly fortunate
position. The nation’s recovery from the coronavirus
crisis is moving better than expected and zero COVID-19
cases existing in the