NZIER Consensus Forecasts shows growth outlook highly uncertain

Abstract

The latest NZIER Consensus Forecasts showed an even greater degree of uncertainty over the growth outlook ahead. With New Zealand having eliminated the number of active cases of COVID-19 and moving to Alert Level 1 on 8 June, focus now turns to keeping imported cases at bay on the long road to recovery for the economy. The large range in forecasts across the key economic measures highlights the uncertainty in how this recovery will pan out. The rapidly evolving situation meant that due to the timing of when the forecasts were finalised this affected the extent to which an expected impact of the coronavirus was captured in the forecasts, and thus likely contributed to the wide range in forecasts. Nonetheless, we continue to consider the average of the analysts’ forecasts as providing a good indication of the growth outlook. Although there is a downward revision to the growth outlook through to 2021, beyond that expectations are for stronger growth in the subsequent years. Hence the growth outlook for the New Zealand economy is V-shaped, with a sharp decline in activity forecast for the coming year, followed by a strong rebound.