Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Strong Economic Fundamentals Anchor New Zealand To Sail Through The Coronavirus Storm

New Zealand Government seems to be advancing well to deal with the unprecedented global crisis in the face of ‘no-cap’ wage subsidy scheme, which is expected to pump in $4 billion into the economy over the next three months. This came in addition to the economic stimulus package worth $12.1 billion, intended to support New Zealanders from the impact of pandemic coronavirus (COVID-19).

Finance Minister Grant Robertson stated that the New Zealand’s Government is doing what it takes to support the country’s businesses and workers. He added that the Government can do this because New Zealand is one of the best-placed economies in the world to deal with COVID-19, based on the pillars of strong economic fundamentals and low Government debt.

While the country entered Alert Level 4, the New Zealand Government steadfastly responded to not only adopt quarantine measures but also bolster the fiscal stability of the nation and its people.

  • Government Uses Its Balance Sheet to Protect the Cashflows of Businesses

The analysts are forecasting massive economic shock following the nation-wide lockdown and suspension of the non-essential services. However, the New Zealand Government seems to be well-prepared to cushion the blow.

Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr stated: New Zealand’s financial system remains sound with strong capital and liquidity buffers.

Moving forward amid the global financial crisis, the NZ Government launched Business Finance Guarantee Scheme to boost economy and offer financial arm to the New Zealand businesses. Under this plan, the small and medium-sized firms with the annual turnover between $0.25 million to $80 million can apply for loans up to $0.5 million for up to three years. It is worth noting that in case of any loan default, the Government would bear 80% loss, while the 20 % would be borne by the bank.

  • Government: New Zealanders Income Is The Top Priority

Treasury has warned that New Zealand job market might hit the rock bottom with the chances of unemployment rate striking double digits. But in response to this chaos building around the job market, the New Zealand Government removed the limit on its wage subsidy scheme, and raised benefits and tax changes to support cashflow. The change could cost $9.3 billion on the assumption that 50 percent of businesses would access the scheme. It is in comparison to the previously estimated cost of $5.1 billion in the normal scenario of wage subsidy scheme.

But the Finance Minister Grant Robertson reminded that $9.3 billion is just an estimate as there is no cap placed to support workers and businesses. He also stated that presently the Government’s priority is to ensure that the New Zealanders continue to receive income in some way through this period of global crisis.

The scheme is articulated to retain the employment relationship between the employers and their staff during Covid-19 lockdown. It would support businesses concerning payment to employees, whereas the support workers would continue receiving income even if they are not able to work.

  • Reserve Bank of New Zealand reduced cash rate from 1.0 percent to 0.25 percent

Reserve Bank of New Zealand (RBNZ) has also acted promptly as the negative implications of coronavirus continue to drive dire economic scenario. The Central Bank slashed official cash rate (OCR) by 75 basis points to 0.25 percent on 16 March 2020, seeking to stabilize the worsening economic scenario. Further, the Monetary Policy Committee unanimously voted to maintain OCR at this rate for at least next 12 months.

The Central Bank’s governor expressed confidence in the financial system of the nation to beat the impact of coronavirus. The body also signaled to provide further stimulus through Large Scale Asset Purchase programme, if required.

  • Outlook

Financial wellness has become an overbearing concern within the entire national boundary. The present state of the economic and job scenario appears baffling as businesses operations are either reduced or shut. However, New Zealand Government seems strong headed and financially stable to combat the economic impact of the coronavirus in the country. While the duration of the outbreak yet remains a concern, a joint effort and positive nudge is what a nation might need to emerge out of the crisis stronger and healthier.

At the time of writing on 6th April 2020, the S&P/NZX 50 is trading ~2 per cent down at 9,739.

© Scoop Media

Business Headlines | Sci-Tech Headlines


Science Media Centre: Funding For R&D In New Zealand – Expert Reaction

Research, Science and Innovation Minister Dr Megan Woods has today announced $401.3 million funding for research and development through Budget 2020 and the COVID Response and Recovery Fund. The fund includes $150 million for an R&D loan scheme, ... More>>


Maritime NZ: NZ Joins Global Initiative Keeping Ports Open And Freight Moving

New Zealand has joined an international port authorities’ global initiative for safe and efficient movement of goods and shipping during the COVID-19 crisis. World-wide, 56 port authorities have agreed how they will work together facilitating maritime ... More>>


National: National Backs Businesses With $10k JobStart

National will provide a $10,000 cash payment to businesses that hire additional staff as part of our commitment to keeping New Zealanders in jobs, National Party Leader Todd Muller and Finance spokesperson Paul Goldsmith have announced. Our JobStart ... More>>


DIY Law: Government Exempts Some Home Improvements From Costly Consents

Homeowners, builders and DIYers will soon have an easier time making basic home improvements as the Government scraps the need for consents for low-risk building work such as sleep-outs, sheds and carports – allowing the construction sector ... More>>


Media Awards: The New Zealand Herald Named Newspaper Of The Year, Website Of The Year At Voyager Media Awards

The New Zealand Herald has been labelled a “powerhouse news operation” as it claims the two biggest prizes – Newspaper of the Year and Website of the Year – along with many individual awards at the 2020 Voyager Media Awards Website of the ... More>>


ASB Bank: ASB Takes The Lead Again With New Low Home Loan Interest Rate

ASB has moved again to support its customers, cutting a number of home loan rates, including the two-year special rate to a new low of 2.69% p.a. Craig Sims, ASB executive general manager Retail Banking says the reduced rate will be welcome news for many ... More>>


Nathan Hoturoa Gray: The Problems With Testing And Case Statistics For Covid-19

To begin to understand disease transmission in a country requires adequate testing of your population with properly vetted, accurate tests. As the world struggles to find what 'adequate percentage' of the population is necessary, (estimates predict ... More>>


RNZ: Fletcher Building To Lay Off 1000 Staff In New Zealand

The construction company will cut around 10 percent of its workforce as it struggles with the fallout from Covid-19. More>>


Can Pay, Won't Pay: Cashflow Moves Urged

Government Ministers are asking significant private enterprises to adopt prompt payment practices in line with the state sector, as a way to improve cashflow for small businesses. More>>


Gordon Campbell: On Why We Should Legally Protect The Right To Work From Home

For understandable reasons, the media messaging around Level Two has been all about “freedom” and “celebration”, but this is not necessarily going to be a universal experience. When it comes to workplace relations, Level Two is just as likely to ... More>>


New Zealand Government: Supporting Kiwi Businesses To Resolve Rent Disputes

The Government will legislate to ensure businesses that suffered as a result of the COVID-19 response will get help to resolve disputes over commercial rent issues, Justice Minister Andrew Little announced today. More>>


Science Media Centre: Understanding 5G Concerns – Expert Q&A

Recent attacks on cell phone towers have brought concerns over the rollout of 5G technology into sharp relief.
While scientific research has consistently shown that the technology does not adversely affect human health, public concerns about its impact have spread around the world, fueled in part by growing misinformation online. The SMC asked experts to comment... More>>


Trade: Record Monthly Surplus As Imports Dive

Imports in April 2020 had their biggest fall since October 2009, resulting in a monthly trade surplus of $1.3 billion, Stats NZ said today. “This is the largest monthly trade surplus on record and the annual goods trade deficit is the lowest ... More>>


Media Blues: Stuff Chief Executive Buys Company For $1

Stuff chief executive Sinead Boucher has purchased Stuff from its Australian owners Nine Entertainment for $1.
The chief executive was returning the company to New Zealand ownership, with the sale is expected to be completed by 31 May.
"Our plan is to transition the ownership of Stuff to give staff a direct stake in the business as shareholders," Boucher said in a statement.... More>>


RNZ: Bar Reopening Night 'much, Much Quieter'

Pubs and bars are reporting a sluggish first day back after the lockdown, with the fear of going out, or perhaps the joy of staying home, thought to be a reason for the low numbers. More>>


Stats NZ: New Zealand’s Population Passes 5 Million

New Zealand's resident population provisionally reached 5 million in March 2020, Stats NZ said today. More>>

NIWA: Seven Weeks Of Clearing The Air Provides Huge Benefits: Scientist

Seven weeks of lockdown has provided evidence of how pollution can vanish overnight with benefits for the environment and individuals, says NIWA air quality scientist Dr Ian Longley. Dr Longley has been monitoring air quality in Auckland, Wellington ... More>>


Government: Milestone In Cash Flow Support To SMEs

A significant package of tax reforms will be pushed through all stages in Parliament today to throw a cash flow lifeline to small businesses. More>>