Covid-19 could hit New Zealand's economy twice as hard as Australia's – here's why
- Experts are predicting New Zealand's economy will be far worse than Australia's in the coming months, despite both countries handling the coronavirus pandemic well.
- By the end of 2020, New Zealand's economy could be 10.4% smaller, while Australia's is expected to be 4.7% smaller, economists told The Wall Street Journal.
- The reason for this discrepancy is that New Zealand's lockdown was far more stringent than Australia's, and the repercussions from that could be long-lasting.
- For mores stories go to www.BusinessInsider.co.za.
New Zealand and Australia have both managed to get coronavirus cases down to similarly low numbers in relative terms, yet the future for New Zealand's economy could be almost twice as grim as Australia's.
Over the next three months, economists forecast New Zealand's economy will contract by more than 20%, while Australia's economy is expected to shrink by about 13%, The Wall Street Journal reported. By the end of 2020, New Zealand's economy could be 10.4% smaller, while Australia's is expected to be 4.7% smaller.
Australia & New Zealand Bank Grouping economist Elizabeth Kendall, who is based in New Zealand, told The Journal: "This reflects the fact that our lockdown is very strict. We also see quite a protracted recovery here."
As of April 30, New Zealand, which has a population of about 5 million, had 1,476 confirmed cases of Covid-19 with 19 deaths, while Australia, which has a population of about 25 million, had 6,752 confirmed cases of Covid-19 with 91 deaths, according to data from John Hopkins University.
The two countries took some similar measures to combat the coronavirus including closing their borders to foreigners and enforcing quarantines for people returning home. But the rest of their approaches differed.
In New Zealand, for its month-long "Alert Level 4" lockdown, people could not interact with anyone outside of their households. Supermarkets and pharmacies were the only places still operating. Takeaways have only begun to be delivered earlier in the week as the lockdown was eased to "Alert Level 3."
In Australia, bars and restaurants stayed open the entire time to provide takeaways. Australia kept its construction and mining industries running. People could get haircuts, meet friends for coffees, or use babysitters, according to The Guardian.
New Zealand's stricter lockdown meant most people could not trade, Auckland-based economist Shamubeel Eaqub told The Guardian, which caused a much wider impact. His firm Sense Partners estimated during "Alert Level 4" lockdown electronic spending was half what it normally is.
Despite the parallels and their geographical proximity, Otago University epidemiologist Brian Cox told The Guardian, "You can't compare today in Australia with today in New Zealand."
He said: "The epidemic in Australia has essentially been going for another two weeks and our epidemic was taking off a lot faster than Australia's. We had to do a serious correction to get anywhere near where we've got to now."
It's not all doom and gloom for New Zealand either. Sydney's HSBC chief economist Paul Bloxham told The Journal that New Zealand might see a sharper recovery - comparing it to a natural disaster with a swift, decisive response - while Australia could have a longer slump.
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