International conditions contribute uncertainty

The BusinessNZ Planning Forecast for the September 2020 quarter shows the economy in deep uncertainty following two quarters of Covid-19.

It records significant improvement over the September quarter as the economy briefly came out of lock-down, before Auckland went into Level 3 lockdown and the rest of the country into Level 2.

For this reason, the BusinessNZ Economic Conditions Index sits at 8 for the September 2020 quarter, up 18 on the previous quarter and up 7 on a year ago.

BusinessNZ Chief Executive Kirk Hope says the improvements seen in the quarter’s data are all from a very low base and subject to heightened uncertainty.

“Forecasts will be subject to significant change as the global and domestic scene continues to evolve over coming months.

“However, despite all the uncertainties, the New Zealand economy is still in relatively good shape compared with many other countries.

“Our key trading partner China has recovered somewhat, bringing good news for exports, particularly agricultural commodities, where prices are holding up remarkably well.

“New Zealand’s response has been broadly in line with international best practice in terms of managing Covid-19, but it seems unsustainable for the world to remain in various stages of lockdown with borders, beyond goods and some service movements, effectively cut off.”

Mr Hope said there was a strong case for greater investment in effective border protection measures allowing certain groups of people to come here and quarantine before being released into the community, including New Zealanders returning from overseas, international students, skilled migrants, and overseas people willing and able to reside here while working remotely for overseas companies.

“New Zealand’s prospects for economic recovery and growth depend to a great extent on our ability to open the border,” he said.

The BusinessNZ Economic Conditions Index tracks 33 economic indicators including GDP, export volumes, commodity prices, inflation, debt, and business and consumer confidence.

The BusinessNZ Planning Forecast for the September 2020 quarter is on www.businessnz.org.nz

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