The Minister of Finance is sounding a warning New Zealand is unlikely to escape global economic fallout from Covid-19, with unemployment numbers expected to swell close to 10 per cent in coming months.
Grant Robertson today told Newstalk ZB's Mike Hosking yesterday's shock unemployment rate drop to 4 per cent in the June was a "good result" but the next three months were expected to see the pendulum swing the other way.
"The economic hit of this crisis is going to be felt most acutely in the September quarter and obviously we'll see that data in a few month's time," said Robertson.
With the Government wage subsidy coming to an end on September 1, Treasury is forecasting unemployment to reach just under 10 per cent in the next quarter.
Robertson said despite the grim forecast New Zealand could be helped by having come out of lockdown quicker than originally expected and the current level of economic activity.
Asked what he thought it would ultimately reach Robertson replied: "I'm certainly working on not getting into double digit areas.
"The issue we've got though is the rest of the world because while we've got things happening in our economy everybody can see the stories from overseas about things getting worse.
"That will ultimately have an impact on New Zealand so for now it's probably best to look just one quarter at a time and we're looking to keep under 10 per cent for that September quarter."
Robertson today urged banks to keep helping customers through this difficult time saying through measures put in place by the Reserve Bank and government stimulus packages there was every reason for them to support viable businesses and households.
"It's important that they see this as a one-in-100-year event, recognise they've got strong support from the Reserve Bank and the Government and get alongside New Zealanders."
He said with the wage subsidy coming to an end in a few week's time he was confident it was not finishing early. Targeted support remained in place with the income relief payment and business loans.
"The kind of package that we've put out amounts to all up around 20 per cent of GDP so I feel like we're doing what we need to do alongside the Reserve Bank."
Though he admitted come September 2 there could be some tough times ahead.
"It's certainly going to be difficult for some people who do end up losing their jobs when the wage subsidy extension ends but that won't be the case for every single person on the wage subsidy extension."
Many businesses were now operating well and some were even re-employing people they had earlier laid off during lockdown.
In the meantime with two former prime ministers calling on the Government to allow more people to come into the country, Robertson said he was looking at how to best manage the border and was currently exploring going down this path but it was something that need care.
"We've got to keep New Zealanders safe. That's our first priority no matter what. Yes, those who are helping the economy tick over, we're already bringing some of those people in and we need to make sure we lift our capacity but we cannot compromise the gains we've made."
Robertson said the Government was in talks with universities about allowing foreign students into the country and working how to do that in a safe way.
"We've got to make sure these facilities are absolutely top-notch because we do not want to see in New Zealand what happened in Melbourne."
He said he was relatively agnostic about who ran the managed isolation facilities but the rules and regulations around it, including having a high level of quality assurance, were vital in keeping the community safe and free from Covid-19.