New Zealand’s government said the fiscal and economic impact of the coronavirus pandemic will be less severe than first feared as its decision to impose one of the world’s strictest lockdowns pays off.
Economic growth will recover more rapidly while budget deficits and net debt will be much lower than expected just three months ago, Finance Minister Grant Robertson said Wednesday in Wellington when presenting the half-year fiscal and economic update. Unemployment will now peak at 6.9% at the end of next year rather than the 7.8% predicted in September.
“The government’s decision to act quickly in response to the global Covid-19 pandemic has contributed to a better than expected economic recovery,” Robertson said. “While New Zealand’s economy contracted in 2020, it is forecast to rebound strongly in 2021, outperforming regions we compare ourselves to like the euro zone, the United Kingdom and Japan.”
New Zealand’s strategy to eliminate Covid-19 from the community saw it impose a harsh nationwide lockdown that tipped the economy into recession, but its success allowed a relatively quick resumption of normal life. Today, as many countries face new lockdowns, New Zealanders head into the Christmas vacation free of any restrictions.
While gross domestic product plunged a record 12.2% in the second quarter, economists predict it surged by 12.9% in the third, according to a Bloomberg survey. That data is due tomorrow.
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