This past week Westpac has come out with its weekly economic report, showing the New Zealand economy has been a lot more resilient than expected, and bouncing back quickly.
As we are all too aware, New Zealand didn’t have a good start to the year with the lockdown in March-April. However, Westpac reports that the damage has been much less severe than forecasted back in April. From the moment the alert level was reduced, and we could all move about again, economic activity quickly sprang back to life. When tracking a range of high-frequency indicators, including spending activity, job advertisements, traffic volumes, house sales and business confidence, Westpac reports that by the time the country moved to Level 1 in early June, many parts of the economy were back to or near their pre-Covid levels. In fact, most of the lasting impact appears to relate to the closure of the international borders rather than the lockdown.
New Zealand’s lockdown was one of the strictest in the world at the time. However, the true test is not how far each country fell during lockdown, but how strongly they come out the other side. With New Zealand now operating under less restrictive conditions overall than Australia (though with some regional differences), we’re expecting a more vigorous rebound here in the coming quarters, Westpac says. We’re also likely to fare much better than countries that have responded too late or too weakly to manage the spread of the virus, and will face ongoing restrictions and self-imposed social distancing.
Westpac are now forecasting a 8.5% rise in GDP for the September quarter, with a further rise of 3.9% in the December quarter. That includes the impact of the most recent restrictions – if the country had remained at Level 1, Westpac would have been expecting a number closer to 11% for the September quarter.
What’s really good now is that we have solid evidence that the economy is more capable to rebound from a lockdown than anticipated, which is crucial for government policies and business planning moving forward, as well as business and consumer confidence New Zealand-wide.
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