XE Data Update - NZ Treasury Releases Economic Scenarios For Lockdown

The New Zealand Treasury released its economic scenarios for lockdown. The key points are:

• The pandemic is a ‘once in a century’ public health shock having a profound impact on economic and financial systems around the world and in New Zealand.
• There is a high level of uncertainty on the path the NZ economy will take.
• All scenarios begin with a deep contraction in activity in the June quarter
• When the public health risks diminish, and containment measure here and internationally de-escalate, the global and domestic economy will begin to recover, supported by large fiscal packages and the significant easing in monetary policy -timing and pace of recover is unclear.
• NZ GDP to fall at least 13% in year to March 2021 and could fall as much as 33%
• Peaks in the unemployment rate will be around 13% if the lockdown remains at 4 weeks
• If lockdown extended the unemployment rate could reach between 17.5 to 26%
• If lockdown stays at 4 weeks, and the Government provides extra support for businesses, the unemployment rate can stay below 10% and return to 5% by 2021
• Forecast show the NZ economy can bounce back to be NZD$70 billion larger by 2024 than in 2019.
• World outlook is also highly uncertain

The

NZD little changed in immediate response

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Current indicative levels are:

NZD-USD 0.6070 / 0.6095

NZD-AUD 0.9535 / 0.9560

NZD-EUR 0.5565 / 0.5590

NZD-GBP 0.4955 / 0.4980

NZD-JPY 65.50 / 65.75

Please call for further information or pricing.

Below is the link to the complete Treasury report:

https://treasury.govt.nz/system/files/2020-04/c19-4265378-t2020-973-economic-scenarios-v2.pdf

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