More economic research on new Covid-19 lockdown measures points to an immediate hit to GDP, although we may see the "rebound" recovery extended into the later part of the year.
ANZ economists have updated their GDP forecasts to reflect both the stronger domestic recovery of the past few months and the new lockdown costs.
"We estimate that renewed lockdown restrictions will shave a little over 2.5 percentage points from the Q3 [third quarter] rebound with some of this being pushed into Q4," said ANZ senior economist Miles Workman.
"It looks like the Q3 rebound is going to be hampered by renewed lockdown measures, but all going well the recovery will extend into Q4 before the data begins to settle down from Q1 2021, assuming the current outbreak can be contained."
ANZ is still picking a solid bounce of 16 per cent GDP growth in the third quarter.
It estimates that the fourth quarter of 2020 will see a 1.2 per cent increase (quarter on quarter).
Its latest forecast for the calendar year sees the economy facing an annual average change in GDP of -7 per cent, compared to an earlier forecast of -8 per cent.
But Workman warns that reflects the impact of the current lockdown being felt in the March quarter of 2021, where ANZ now sees an annual average GDP change of -8.1 per cent.
"All the while, and throughout 2021, we estimate that closed borders will leave the economy around 5 per cent smaller than otherwise," Workman said.
"The key message is that the underlying state of the economy, the underlying momentum, is going to weaken, every time there's renewed lockdowns."
ANZ has estimated that under alert level 3 the economy is able to operate at around 80 per cent capacity and around 90 per cent at alert level 2.
"Given Auckland accounts for 38 per cent of GDP , we estimate that with Auckland under alert level 3 and the rest of NZ at alert level 2, nationwide activity can run at around 85 per cent of pre-crisis levels," Workman said.
However, there was a "big difference between what can happen and what will happen", he said.
And there were a number of reasons why lockdown levels might hinder economic activity by more the second time around.
"Many businesses are in a much weaker starting position, having used up what savings buffer they had the first time around," Workman said.
"The wage subsidy extension will help, but other operating expenses (such as rents) haven't gone away."
Job losses had also put many households in a weaker position.
"The savings that some households spent on spas and e-bikes in lieu of an overseas holiday this year is now gone," Workman said.
"It's very difficult to know how significant an offset this was the first time around, but it's fair to say it was a one off."
Yesterday international economic research agency Fitch Solutions has revised down its 2020 GDP growth forecast for New Zealand, from -1.4 per cent in 2020 to -4.5 per cent.
However, the agency said it now expects a stronger recovery in 2021, with growth of 6 per cent, from 4.1 previously.
That was largely due to a stronger than expected recovery in China lifting New Zealand's export performance.