Staff of Reuters 2 minutes Read this article (Adds details, comments) Reuters, WELLINGTON, June 29 – The Reserve Bank of New Zealand (RBNZ) announced on Tuesday that economic activity was returning to pre-COVID-19 levels, owing to improved domestic health outcomes and higher prices for New Zealand’s goods and exports. The central bank said in its annual statement of intent that a pickup in consumer spending and construction activity, aided by strong monetary and fiscal stimulus, was also boosting employment growth. “However, vulnerabilities remain, and the recovery will require continuing monetary and fiscal support,” said Governor Adrian Orr and Deputy Governor Geoff Bascand in a statement. Orr stated, “We are prepared to tackle the challenges posed by our economic and financial landscape.” New Zealand implemented strict lockdowns and social distancing measures to virtually eradicate the coronavirus in the country, allowing the economy to recover faster than projected. After hinting at an interest rate hike next year, the RBNZ became one of the first advanced nations to announce a shift away from the stimulatory policies implemented during the epidemic last month. “Over the medium term, economic policy settings can be expected to normalize as long as COVID-19 is contained and the global and economic recovery is sustained,” the RBNZ said in a statement. However, it was noted that risks linked with the property market were increasing, and that certain sectors of the economy appeared to be more vulnerable to future downturns than they were prior to the epidemic. House prices have increased by nearly 30% in the last year, owing to record low loan rates and a scarcity of affordable housing. (Praveen Menon and Renju Jose contributed reporting; Jacqueline Wong edited the piece.) Continue reading
