Economic activity across the Auckland region and the country bounced back to levels experienced under Alert Level 1 following Auckland’s move out of Alert Level 3, analysis in the Treasury’s latest Weekly Economic Update shows.
The analysis of economic data since Auckland’s move out of Level 3 shows:
· Auckland card spending under Level 2.5 bounced back to levels similar to spending under Alert Level 1
· Auckland heavy traffic volumes rebounded to be higher than the same time a year ago
· Rest-of-NZ card spending recovered to levels seen during Alert Level 1
· Rest-of-NZ heavy and light traffic volumes both rose above 2019 levels.
“The data shows the economic benefits of sticking to our clear elimination plan and investments in extra contact tracing and health resources. It follows from the strong bounce we saw after the initial moves after Levels 4 and 3,” Finance Minister Grant Robertson said.
“The short-term impact of the initial move to Level 4 will be shown in this week’s April-to-June GDP figures. We’ve been upfront that there will be a large drop in activity in the June quarter, due to the impact of Level 4 to eliminate COVID-19.
“What our consistent health response means is we get a head-start on the economic recovery – economists are forecasting a record quarterly increase in GDP in the September quarter (reported in December) as the economy bounces back.
“The Treasury’s original estimate for June quarter GDP in Budget 2020 was for a 23.5% drop. Since then, economists have said New Zealand’s economy is stronger than expected in the near term as we opened up quicker than other countries.”
The Treasury this week will also release the Pre-Election Fiscal and Economic Update (PREFU).
“The PREFU will likely show what we all know already – that our response to the 1-in-100 year shock caused by COVID-19 required significant ongoing investment to support business and protect jobs and incomes,” Grant Robertson said.
“At the Budget in May, the Treasury estimated a Government OBEGAL deficit of 9.6% ($28.3 billion) in the year to June 2020 due to the considerable investments required to respond to the impacts of COVID-19.
“While it is difficult for anyone to make predictions with any certainty at the moment due to the uncertainty about COVID-19 around the world, what we do know is that New Zealand will remain in one of the best economic and fiscal positions in the world coming out of COVID-19,” Grant Robertson said.
Contact: Alex Tarrant +64 21 220 6011