The New Zealand government announced an unprecedented economic package on Thursday to cushion the blow of coronavirus, or Covid-19, pandemic.
In the Budget 2020, Finance Minister Grant Robertson on Thursday, unveiled a NZ$50 billion ‘COVID Response and Recovery Fund’ which will invest in wage subsidy extension, free training and apprenticeships, house build programme, infrastructure development, and support for exporters and SMEs.
“This is the most significant financial commitment by a New Zealand government in modern history,” Robertson said.
Of the total NZ$50 billion, investments totaling NZ$13.9 billion have already been made from the fund and NZ$15.9 billion is set aside to continue with the immediate response, leaving NZ$20.2 billion for future investment.
These investments will be funded through long-term borrowing. The government debt is forecast to peak at 53.6 percent in 2023 and 2024.
New Zealand’s real growth rate was forecast to decline to -4.6 percent in the year ending June 2020, driven by a quarterly decline in GDP of over 20 percent in the June 2020 quarter.
Annual average GDP growth is projected to return to positive from the year ending September 2021 onwards.
The unemployment is expected to increase significantly, rising to 8.3 percent in the year ending June 2020, before peaking at 9.8 percent in September 2020, and then recovering thereafter.
Operating deficits will average 9.3 percent of GDP between 2020 and 2022. Careful economic management will see the deficit reduce to 1.3 percent of GDP by 2024, Robertson said.
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