ON THE MONEY

SHARON ZOLLNER, CHIEF ECONOMIST, ANZ

CHALLENGES

Rising unemployment and falling incomes have been drugged by the wage subsidy and mortgage deferment schemes, but these cannot be extended indefinitely.

Card-spending data shows that retailers at least are doing it very tough.

We estimate that the closed border carves about 5% out of the New Zealand economy, and that’s before you consider the impact on net migration and skill shortages. Net migration has provided about half of New Zealand’s economic growth in the past five years, and despite returning New Zealanders, population growth will be dramatically lower as long as a quarantine is required.

The key challenges in the next 12-18 months include uncertainty (making it difficult to plan); the uncomfortable combination of rising unemployment and severe skill shortages in pockets; and transitioning policy. “Pivoting to growth” sounds great. “Removing life support” sounds painful. But they’re two sides of the same coin.

OPTIONS/OPPORTUNITIES

We’ve learnt a lot about taming the virus, scaling up testing and contact tracing