New Zealand Institute of Economic Research (Inc) Media Release, 12 December 2019 For immediate release
There is a low risk of a recession in 2020, said NZIER in an Insight released today. The article looks at some of the warning signs of a recession and the tools available to combat the effects if a recession was to occur.
“New Zealand’s economy is slowing, and indicators are mixed as to whether a recession is on the way over the coming year, but on balance we see little cause for concern that a recession will strike New Zealand in 2020” said Christina Leung, Principal Economist. “The global economic environment is of course difficult to predict”, said Leung. “We looked at a number of current indicators – timing, business confidence and activity, unemployment and the yield curve, and found that on balance New Zealand’s economy should continue to grow throughout 2020”. New Zealand has levers it can use to combat recession. “If the global situation changes, monetary and fiscal policy can be used to reduce the risk of recession here, or to reduce the impact of a recession once it has happened” said Leung.
“Timing is everything when it comes to using these levers”, said Leung, “policy changes always take some time to show an effect, so it’s important that policy makers pay attention to the recession indicators and respond with the appropriate policies at the right time”.