- With a virus-free spell of over 3 weeks, New Zealand reported new cases of COVID-19, though control measures remain in place.
- The economy is reopening with a myriad of aids for businesses to help them recover, sustain and eventually flourish.
- Connections with Australia and Asia, along with government subsidies and accelerating digitisation might prove crucial as New Zealand ramps up economic activities.
It is no revelation that New Zealand fought the novel coronavirus in one of the most ways the world has witnessed since the pandemic wreaked havoc. However, this battle against what can be referred to as an invisible enemy is not yet fully won, with fresh infection cases, while the economy and businesses are still coping to hit the ground running.
In this context, let us look at the possible recovery scenario faced by economy and businesses, driven by three ‘Gs’: Global Connections, Government Support, and Galvanic Digitisation.
‘G’lobal Connections Catalysing NZ Businesses
On 12 June 2020, New Zealand signed its first-ever trade agreement, theDigital Economy Partnership Agreement (DEPA) with Singapore and Chile, which focuses on concerns exclusively related to the digital economy. This new agreement is expected to assist NZ exporters, while SMEs can leverage from prospects that arise out of digital trade / e-commerce.
Besides DEPA which can be a game-changer in a post-COVID-19 era, New Zealand’s meaningful relationship and engagement with its Asian and ASEAN neighbours is likely to be a crucial factor framing the nation's prosperity in a post-COVID19 era. This is primarily due to the country’s lack of economic size, military spend, and working-age population, which can diminish its influence in the Asian region. Therefore, proposals like The Columbo Plan, that created tangible links, awareness, and relationships amongst New Zealanders and people of Asia will be vital.
The latest report in New Zealanders’ Perceptions of Asia and Asian Peoples highlights that New Zealanders feel it is important to reinforce ties with Asia, especially in the wake of COVID-19. So much so, since the crisis, there has been a significant jump in the number of Kiwis who feel it is important to develop ties with Asia (over 60 percent). This lays emphasis on trade agreements, China's Belt and Road initiative, and the Indo-Pacific construct.
Not to forget, perhaps New Zealand’s most significant international connection- Trans-Tasman relations, or the Australia–New Zealand equation. The economic relationship between both countries is worth approximately NZD 24 billion per year. Australia, New Zealand’s closest neighbour is also its largest trading partner overall (goods and services).
Australia and New Zealand share a long history of close cooperation, from trade to tourism to fighting collectively in World Wars. Amid COVID-19, both countries have been vocal about the trans-Tasman Covid-safe travel zone, a travel corridor (“travel bubble”) that will assist trade and economic recovery, help kick-start the tourism and transport sector, enhance sporting contacts, and reunite families and friends.
‘G’overnment Subsidies for Businesses
In response to COVID-19 measures, the NZ Government launched NZD 12.1 billion business continuity package, including wage subsidies for affected businesses in all sectors and regions (NZD 5.1 billion), leave and self-isolation support (NZD 126 million), an income support package for most vulnerable (NZD 2.8 billion), redeployment package (NZD 100 million) and an aviation support package (NZD 600 million).
Besides this, the Government has taken steps to support businesses wherein tenants have been unable to pay rent as their business was not fully operating and landlords were unable to meet mortgage payments- changes were made to the Property Law Act 2007 as part of COVID-19 Response (Further Management Measures) Legislation Act 2020.
The Small Business Cash Flow Loan Scheme (SBCS) is also a one-off government loan open to businesses and organisations affected by COVID-19, including self-employed and sole traders, to help with cash flow management. Applications were opened from 12 May and will remain so till 24 July 2020.
‘G’alvanic Digitisation Defining New Normal
While the threat of a deep recession seems unavoidable according to some experts, let us browse over possible implications of paradigm shifts in technology trends and adoption on certain sectors amidst health crisis:
The Agri-food sector needs to shift focus to the ‘new normal’, grabbing opportunities that arise from tech disruption and drastically accelerate plans that boost organisations’ position in this new dynamic landscape of changing customers’ needs.
As rightly suggested by KPMG Research, construction businesses in the country have retained the status quo with only a slight impact so far. So much so, a few sites are even working double shifts to meet advance work as well as deadlines.
Businesses in this sector will need to be proactive about employee safety and tech adoption in order to sail through economic turmoil.
Infrastructure businesses have continued to facilitate the smooth provision of transport, connectivity, and utility services amidst multitude COVID-19 uncertainties.
Attaining effective balance, ranking the safety of customers and staff while ensuring the continued provision of essential services might remain crucial for full economic recovery. Besides, deployment of robust resilience plans and the utilisation of smart and digital solutions plays a crucial role in defining the post COVID era.
Leisure & Hospitality
A decline in tourism owing to border restrictions, work from home impacting foot traffic and social distancing kept the leisure and hospitality businesses suppressed. While, we cannot deny some traffic across the space amidst the growing trend of e-commerce.
It has been quite astonishing that New Zealand fought a global pandemic in such a short span, thanks to a strict 75-day lockdown period with phased economic recovery, supported by commendable political leadership and adherence to expert advice. With the virus spread in control, New Zealand now seems to be on the right path of recovery from the Global Virus Crisis backed by Government aid flows, strengthened global ties and accelerated tech trends.