According to S&P Global, New Zealand is expected to recover from the economic strains of COVID-19 in a better position than most countries in the Asia-Pacific region and around the world.
Due to New Zealand’s exceptional pandemic management and well-targeted economic stimulus, the global recession is expected to cause less permanent damage here than it will elsewhere in the world.
“New Zealand definitely is one of those economies that has exited the most severe periods of the pandemic first, and that clearly was just because what that allows the economy to do is reopen those face-to-face service activities that are so important for the labour market, and that hopefully should get jobs restarted [so] people can go back to work,” said Shaun Roache, S&P’s chief economist for Asia-Pacific.
The country’s real GDP is expected take a long-term hit of 2.7%, which is similar to the losses estimated for Australia and Japan – and less than what New Zealand lost as a result of the 2008 global financial crisis.
The economy is still expected to contract by 5% in 2020, but this will be followed up with a resurgence of growth in the coming years – 6% in 2021, 3.4% in 2022, and 3% in 2023.
International tourism – which usually contributes a large share of New Zealand’s GDP – remains an area of concern, however. In response, many in the sector are planning to shift their focus from high volume to high value tourism.