Grant Robertson's coronavirus warning: NZ's big economic uncertainty

Author
Jason Walls, NZ Herald,
Publish Date
Thu, 27 Feb 2020, 3:26PM
In a speech to the Auckland Chamber of Commerce this afternoon, Grant Robertson warned that New Zealand will experience a "short, sharp" economic hit. (Photo / Mark Mitchell)
In a speech to the Auckland Chamber of Commerce this afternoon, Grant Robertson warned that New Zealand will experience a "short, sharp" economic hit. (Photo / Mark Mitchell)

Grant Robertson's coronavirus warning: NZ's big economic uncertainty

Author
Jason Walls, NZ Herald,
Publish Date
Thu, 27 Feb 2020, 3:26PM

Finance Minister Grant Robertson is urging New Zealand businesses to contact their banks and make plans for how they're going to manage the economic impact of coronavirus.

This comes as global sharemarkets – including New Zealand's NZX – continue to dive as the deadly virus spreads across the world.

In a speech to the Auckland Chamber of Commerce this afternoon, Robertson warned that New Zealand will experience a "short, sharp" economic hit.

"We meet today in the shadow of one of the biggest uncertainties that the global economy has seen in recent times," he told those gathered.

He warned that the impact would have a "serious impact on the New Zealand economy in the short term".

He stressed this point numerous times during his speech, making it clear that the economy would "rebound".

However, he said businesses do need to assess their options.

"I urge New Zealand's banks and their customers to sit down together and talk through their plans for managing the impacts of the virus on their business."

He also urged businesses to talk with their staff about any adjustments that might be necessary.

Despite this warning, much of Robertson's speech attempted to play down coronavirus concerns.

New Zealand, he said, is in a "strong position" to stand up to the economic and health impacts of coronavirus.

He again cited the Government's strong fiscal position, noting the low levels of debt, high tax revenues and expected surpluses.

The Government's recently announced $12 billion infrastructure package would also help spur the economy, he said.

"We have the capacity and ability to do what it takes."

Robertson also detailed the three scenarios the Government is preparing for, as coronavirus continues to spread.

The first, as he detailed on Monday, is a temporary global demand shock which would "significant impact on the New Zealand economy across the first half of 2020".

Nowhere in the speech did Robertson put a number on how "significant" the number would be.

But earlier this week, ANZ expected first-quarter GDP growth to be -0.1 per cent.

The second scenario was a longer period of economic hardship and the third was planning to respond to a global pandemic.

"In such circumstances, it may be necessary to consider immediate fiscal stimulus to support the economy as a whole and businesses and individuals through this period."

In other words, if coronavirus turned into a global pandemic – the Government would immediately start spending a lot of money to help keep the economy buoyant.

But Robertson pointed out that the Government was not predicting this scenario; rather "we are doing the planning for it".