- NZ was declared coronavirus free until 15 June, but as of 19 June, at the time of writing, it had 3 active cases.
- Recently, PM Jacinda Arden mentioned that she was laying emphasis on reinstating public confidence, and, certainly, confidence in the government and ministers as well.
- OECD has predicted NZ GDP will fall by 8.9% in 2020 while ANZ News Zealand forecasted a shrink of 8-10% in GDP for this year.
On 15 June, NZ stock market remained volatile owing to increasing concerns that there could be another COVID-19 outbreak in China that also recorded shaky industrial production data.
On the same day, China’s capital Beijing reported 75 cases in a wholesale food market in Beijing. As a result, the market has been shut down, with people living in 10 housing estates around the market would not be allowed to leave their homes. Health officials have reported 49 new cases nationwide on 14 June out of which 39 were in Beijing.
The S&P/NZX 50 index fell by 41.82 points to 10,864 points on 15 June as investor sentiment got affected. However, on 19 June 2020, the index rose by 0.32% and was trading at 11,260.80 points, at the time of writing.
Further, international financial markets came to a screeching halt on 11 June where Dow Jones sank 1800 points, and S&P 500 dropped 5.9% as lockdown began again due to rise in coronavirus cases in the US. Some of the increase in cases is related to reopening of the economy and lifting of restrictions.
However, S&P 500 ended 1.3% higher while Dow was up by 1.9% on 13 June despite nervous sentiment amongst investors. The stock market had fallen a little further to 0.28%. The ups and downs on Wall Street so far reflected that economic recovery would not be as swift as was hoped by investors.
There were some strong performers and some decliners on NZX on 19 June 2020.
The shares of Augusta Capital Limited (NZX:AUG) rallied 31.4% to 90 cents on 15 June after Centuria Capital announced full takeover to acquire Augusta at an offer price of NZ$1 a share in NZ$0.2 in cash and 0.392 shares of Centuria. On 19 June 2020, at the time of writing, AUG was at NZ$0.005, up 0.56%.
New Tailsman Gold Mines Limited (NZX:NTL) was trading flat at NZ$0.008 on 19 June, while New Zealand Oil & Gas Ltd (NZX:NZO) fell by 1.82% and was at NZ$0.540.
SkyCity Entertainment Group Limited (NZX:SKC), a company that runs hotels, which is reliant on international travellers with its casinos gaining from wealthy customers, rose 4.78% to NZ$2.85. Scott Technology Limited (NZX:SCT) rose 2.86% to NZ$1.80 while SeaDragon Limited (NZX:SEA) was at NZ$0.042.
On 19 June 2020, one NZ$ was buying 64.28 US cents (at NZST 18:43 PM), up 0.02%.
NZ has 3 COVID-19 cases
NZ had no active cases and was declared coronavirus free until 15 June. The country was able to fight coronavirus in a short span of time as it imposed a 75-day lockdown period applicable to businesses as well for 7 weeks.
However, by 19 June 2020, there were 3 active cases of coronavirus out of which 2 were detected among 2 females travelling from the UK and 1 case was traced in a man flying back from Pakistan to New Zealand. PM Jacinda Arden is aware of the fact that people of New Zealand had lost confidence in the way government handled coronavirus cases at the nation’s border. Therefore, her primary attention would be on rebuilding the faith in people, government, and ministers.
Until 15 June, NZ had 1504 coronavirus cases and only 22 deaths. The first case was recorded on 28 February and the country on 15 March, NZ closed its borders to foreign travellers with natives coming from somewhere else to self-quarantine for 14 days. A lockdown was announced in late May. Implementation of lockdown measures early and subsequently suppressed the coronavirus outbreak in the country.
NZ concentrated rigidly on active testing and was amongst highest testing rates per capita across the globe. NZ government also had been quite transparent in sending emergency messages to all NZ residents with a clear explanation about the lockdown.
Moreover, NZ economy is dependent on tourism and trade for their income which gives evidence that economic performance of the country will be affected. NZ was always more frightened of the loss of lives rather than the financial fallout due to coronavirus. NZ being an isolated island, with low population proved to be great advantage to the country, as it was able to stay away from borders of other countries and virus could not travel as freely as in other countries through the population. Hence, the geography of the country was of significant help for the nation to supress coronavirus for 24 days straight until 15 June.
Recently, NZ PM Jacinda Ardern passed a tax reform which stated that the government would refund more than NZ$3 billion to small businesses.
New Zealand in recession
Though the nation has only 3 COVID-19 active cases, there are increasing signs of the economy to fall into recession.
As per OECD, the country would witness more significant economic fallout from COVID-19 than other countries even after being in a much better position than others.
OECD estimates that NZ’s GDP will fall by 8.9% in 2020, or 10% in case of a second wave, worse than the OECD average of 7.5%.
ANZ New Zealand Chief Economist Sharon Zollner stated that though disruptions have been easing now, it does not imply that the coming recession will not be bad. NZ has also borne a hole in its pocket due to loss in revenue from tourism as international tourism comprised of 5% of the Kiwi economy.
ANZ New Zealand stated that NZ’s GDP would be 8-10% lesser in 2020, while unemployment will be in low double digits.
PM Jacinda stated that a lot was contingent on how quickly kiwis reorient and move in different sector jobs. There is a need to extend help to people in those jobs where industries require workers badly in horticulture, dairy industry, etc. In terms of COVID-19 cases, things have been under control for Kiwis, but economic fallout on the country has been tremendous.
NZ would need to take cautious steps forward as its economy is expected to sink into recession, making the task of economic recovery difficult.