WELLINGTON- New Zealand’s economy is expected to have settled around pre-pandemic levels by the end of 2020, after a stunning bounce back in the third quarter that was driven by the country’s success in containing the coronavirus, a poll showed on Monday.
The median forecast of economists polled by Reuters showed gross domestic product (GDP) in the fourth quarter grew by 0.1 percent quarter-on-quarter in the three months to December, following a record rebound in the previous quarter.
This is slightly higher than the flat performance predicted by New Zealand’s central bank.
Annual growth was seen at 0.5 percent, just above the 0.4 percent growth a year ago.
After all but eliminating community transmission of COVID-19, New Zealand bounced out of a recession with 14 percent quarter-on-quarter GDP growth in the three months to end-September. That more than reversed the 11 percent drop in the preceding quarter during its strict lockdown.
Such momentum was always going to be difficult to maintain, Westpac Bank said in a note.
“The whopper September quarter result was partly because of catch-up spending as COVID restrictions were lifted, and partly because the loss of international tourism was less of an issue during the winter months. Both of those factors had come home to roost by late 2020,” said Westpac senior economist Michael Gordon.
New Zealand’s border has been shut through summer and year-end holidays, costing the tourism industry billions of dollars. Most economists expect activity to have dropped so far this year.
However, better-than-expected inflation and employment data have sparked a rally in the New Zealand currency and bonds, as the markets anticipates a quicker and stronger recovery.
New Zealand’s central bank last week removed some temporary liquidity facilities it had put in place during the COVID-19 pandemic, as a result of improving market conditions.
The Reserve Bank of New Zealand, however, has looked to temper market speculation about when it will tighten monetary policy, saying it is in no rush.