S&P says NZ one of the better performing Asia-Pacific economies

08:03, Sep 29 2021
STUFF
Economists Brad Olsen and Gareth Kiernan join Stuff Business Editor Susan Edmunds to talk about what level 4 lockdown means for the economy.

Global ratings agency S&P has singled out New Zealand as one of the better performing economies across Asia-Pacific, and one of only two in the region with faster than expected growth this year.

S&P Global Ratings on Tuesday published its latest economic outlook for Asia-Pacific, lowering its projected growth rate for the region this year to 6.7 per cent, from its 7.1 per cent forecast in June.

The agency marked down growth for many Asia-Pacific economies for this year, citing persistent waves of Covid-19. New Zealand and Singapore were the only economies the ratings agency expects to have faster growth than it forecast in June. It upgraded New Zealand’s anticipated growth this year by 80 basis points to 5.4 per cent.

“Notwithstanding the recent lockdowns in parts of the country, we’re seeing an overall positive story for New Zealand,” said S&P Global Ratings economist Vishrut Rana, who is based in Singapore.

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“Indeed, it’s one of the better performing economies across Asia-Pacific, and it’s one of only two economies in Asia-Pacific expected to have faster growth in 2021 than our previous forecast from just three months ago.”

S&P expects robust full-year growth in New Zealand, even after taking into account the sharp slowdown due to the recent pandemic-related lockdowns.
DAVID WHITE/STUFF
S&P expects robust full-year growth in New Zealand, even after taking into account the sharp slowdown due to the recent pandemic-related lockdowns.

Rana said New Zealand saw a rapid economic recovery over the first half of calendar 2021, particularly in the second quarter.

Amid a tight labour market and some labour shortages, the unemployment rate dropped to its pre-pandemic low of 3.9 per cent, and consumer spending remained strong, he said. In addition, an easing of travel restrictions with Australia over the second quarter saw strong growth in travel and tourism revenues, with service exports jumping by 60 per cent over the previous quarter.

Those factors meant that the economy grew by 2.8 per cent in the April to June period, over the January to March period, he said. For the first half of the year, the economy grew by 10 per cent compared with the same period in 2020.

“The strong growth recorded in the first half of 2021 means that we will see robust full-year growth in New Zealand, even after taking into account a sharp slowdown due to recent pandemic-related lockdowns,” Rana said.

“We expect consumer spending and the labour market to remain resilient,” he said. “Although service exports will be weak while international borders are closed, the expected easing of travel restrictions will likely see a strong rebound for the travel and tourism sectors in the coming year.”

Further out, S&P expects New Zealand’s economy to grow 2.7 per cent in 2022, 2.8 per cent in 2023, and 2.7 per cent in 2024.