We were very fortunate that Sharon Zollner, ANZ Chief Economist, was able to join us at our final business breakfast for 2020. Sharon is in great demand as a commentator on the economy up and down the country, and she certainly had her audience at the Karori Park Sports Café glued to her every word throughout a 40 minute, off the cuff presentation, on the state of the world and what’s ahead for New Zealand, in an address entitled “Fortress New Zealand”.
She described our situation in New Zealand currently as being “weird”, with mixed messages in the marketplace, banks doing well, 5% of our population reeling and the other 95% generally ok at the moment. Right now the feeling was more like a war rather than a recession, which is still to come.
She praised the New Zealand Government on lockdown control against covid but said it was too soon to say we had dodged the bullet. She talked about our strengths and weaknesses as a country – having a good chance of elimination of the virus through an early introduction of a vaccine in 2021, resilience to global food prices, low fiscal debt starting point and low corporate debt. On the other hand we have an economy dependent on tourism, immigration for key skill jobs, and high household debt.
Sadly, the impacts are hitting everyone unevenly across all markets in our economy.
She best summed up by saying the prize for beating Covid 19 ( twice) will be a recession, that we will take it with the usual feedback loops that will kick in between unemployment, spending, housing and construction, and an economy that is a slow ship to turn around, especially with fiscal brakes on. Hence her belief we are in the phoney war stage at present in New Zealand.