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Covid-19 is still expected to take a significant toll on the economy, but that toll – according to The Treasury – is not as bad as expected.
Treasury officials had expected tomorrow's GDP figure to reveal a 23.5 per cent drop over the period from when New Zealand first went into lockdown.
But its updated numbers show it's now expecting that figure to be 16 per cent.
Although better than expected, it's still the biggest one-off drop in economic growth in New Zealand's history.
But in the long term the hit will be worse than had previously been expected – this is due to the fact the world economy is expected to do worse than had been expected.
Newstalk ZB political editor Barry Soper told Simon Barnett and Phil Gifford the economy's contracted 16 percent - more than double Australia's seven.
"The reason why they came in better than we did was they kept certain industries going during lockdown, like construction for example, so there was a better economic level of activity."
The GDP figures come out tomorrow, after the Pre-election Economic and Fiscal Update was released today.
During the announcement, the Government's lead economic adviser says the borders could remain closed for far longer than expected.
Newstalk ZB political editor Barry Soper told Si and Phil they've done extensive analysis on when border restrictions will ease.
He says Treasury’s working assumption is that they won't be lifted in January 2022.
"They say that there could be some limited international travel from maybe the latter part of next year."
But Soper says Finance Minister Grant Robertson told him he doesn't agree the wait will be that long.
"He says that bubbles are being worked on at the moment," and that international students could return from the start of next year.