Specific Government measures were in place in an attempt to offset Great Depression threats to New Zealand as a result of the pandemic and lockdown, an economist says.
Tony Alexander was hosted this morning in an online forum where he listed two state measures which he said were aimed at avoiding a significant economic downturn and social disruption in this country.
The financial support could have a significant effect, he said, citing the Work and Income Covid-19 wage subsidy and urgently amending the law last month to stop landlords from evicting residential tenants.
He further cited an attempt to avoid widespread mortgagee sales via a six-month mortgage deferrals or holidays being offered by banks as a result of the economic disruption caused to people in this country.
He also cited the upcoming May 14 Budget and the possibility of an extra $20 billion spending, saying that could also be a further boost to New Zealand's economic recovery.
Governments around the world were attacking what Alexander called second-round effects of the pandemic on economies. That was pronounced in New Zealand, he told the forum run by EndVision.
Darcy Everest, founder and owner of EndVision, hosted the webinar which started at 9.30am and focused on exporting, employment, spending and the economic outlook. EndVision is an exit strategy business and many business owners were in the forum today.
Alexander predicted "very very challenging" environments for businesses in the shorter term: "It will be a number of years before the economy gets back to the size it was."
Unemployment rates are forecast to be higher than 10 per cent this year but by early 2021, the rate could fall back to 2015 levels, "so labour looseness may not be as deep and last as long".
Around 200,000 people in New Zealand were on temporary working visas, and in September special extensions would expire, Alexander said. Many people on those visas would then have to leave the country.
"Jobs for Kiwis, New Zealanders coming first - it might be part of one party's political campaign for the election," he said.
Some of the 600,000 Kiwis living in Australia could return and bring back capital, skills and knowledge, he said.
Alexander is also optimistic about pandemic control measures cited the success of the measures already in place.
"We're well ahead of the curve in attacking this and getting the numbers down to hopefully zero in a few months time," he said.
With 30 per cent of New Zealand exports going to China, this country was "in a relatively good place" and he cited particularly food exports.
One of the potential drivers to stimulate the economy was infrastructure spending. But Alexander said that could be difficult due to the length of time it took to get big projects started.
"The Government will tread relatively cautiously in this area. Some of the stuff they could end up doing could be white elephants," he said citing Think Big in the 1970s "and it led to nearly $20b disappearing down the drain and almost bankrupting New Zealand. We're not going back to anywhere near that."
He backs extra infrastructure spending but raised questions about the practicality of large schemes starting fast.