New Zealand: Atypically long

The global crisis hit New Zealand just as it was undergoing a difficult domestic adjustment. The multiple blows of housing market correction, collapsing world trade, rising risk spreads, tighter credit conditions and unsustainably high private-sector debt suggest a recession of atypical length.

However, major policy stimulus should contribute to modest positive growth next year.

Receding inflation has enlarged the scope for monetary easing, which remains the front line of macroeconomic stabilisation. The deteriorating outlook for public finances, with high external debt, has led the government to trim the initially planned policy stimulus in its recent budget. It should realign spending with the now postponed but still desirable cuts in marginal tax rates, which would improve persistently low productivity growth.

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©OECD Observer No 274, July 2009

Economic data

GDP growth: -1.8% Q1 2020/Q4 2019
Consumer price inflation: 0.9% Apr 2020 annual
Trade (G20): -4.3% exp, -3.9% imp, Q1 2020/Q4 2019
Unemployment: 8.4% Apr 2020
Last update: 9 July 2020

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