Unemployment can be kept below 10 percent - Treasury
Economic scenarios released by the Treasury back the government's decision to go 'hard and early' in the fight against Covid-19.
Treasury scenarios show unemployment can be kept below 10 percent and return to 5 percent in 2021 with the help of additional government support.
Without additional support, that the government is already working on, unemployment could have hit 13.5 percent by the end of a four-week lockdown.
Finance Minister Grant Robertson told Nine to Noon the scenarios are very much assumptions and don't predict what the government is going to do.
"You're talking about a quarterly hit to the GDP, around 25 percent, but then quite a big bounce back and of course that's the nature of the way we measure GDP, if you have a big drop like that, any activity in the economy will then see it rebound somewhat in the next quarter."
The numbers are based on four weeks in level 4, four weeks in level 3 and then a period in level 2.
Being in lockdown for longer, or going back into it after a period of time at a different level will have an impact on the figures, Robertson said.
Severe challenges in the global economy also impact them, he said.
"The sharp V recovery looks very unlikely; I think you're looking somewhere between a U and V in these scenarios."
Every Friday a dashboard will be released updating the data, Robertson said.
Secretary to the Treasury Dr Caralee McLiesh said the seven Treasury scenarios published today were based on a range of times spent at different alert levels, the impact on economic activity at each alert level, and the degree of fiscal support.
"There are a wide range of possible impacts depending on which scenarios you look at.
"Annual average GDP growth is shown to fall by as little as 0.5 percent or as much as 23.5 percent in the fiscal year ending 30 June 2021, and estimates of the unemployment rate in the June 2021 quarter range from 5.5 percent to 22 percent. Two of the scenarios illustrate the cushioning effect of greater fiscal support on GDP and unemployment."
McLiesh emphasised these were not the Treasury view of what would happen but "indicative scenarios, based on assumptions and estimates subject to considerable uncertainty".
They provided an insight into some of the possibilities the government and officials would consider in planning Covid-19 responses and an economic recovery.
"Actual outcomes will depend on a range of factors, including the success of containment measures and the economic response, both in New Zealand and internationally."
McLiesh said the Treasury would publish up-to-date economic information and commentary every week.
Economic scenarios released by the Treasury back the government's decision to go 'hard and early' in the fight against Covid-19.
Treasury scenarios show unemployment can be kept below 10 percent and return to 5 percent in 2021 with the help of additional government support.
Without additional...
Economic scenarios released by the Treasury back the government's decision to go 'hard and early' in the fight against Covid-19.
Treasury scenarios show unemployment can be kept below 10 percent and return to 5 percent in 2021 with the help of additional government support.
Without additional support, that the government is already working on, unemployment could have hit 13.5 percent by the end of a four-week lockdown.
Finance Minister Grant Robertson told Nine to Noon the scenarios are very much assumptions and don't predict what the government is going to do.
"You're talking about a quarterly hit to the GDP, around 25 percent, but then quite a big bounce back and of course that's the nature of the way we measure GDP, if you have a big drop like that, any activity in the economy will then see it rebound somewhat in the next quarter."
The numbers are based on four weeks in level 4, four weeks in level 3 and then a period in level 2.
Being in lockdown for longer, or going back into it after a period of time at a different level will have an impact on the figures, Robertson said.
Severe challenges in the global economy also impact them, he said.
"The sharp V recovery looks very unlikely; I think you're looking somewhere between a U and V in these scenarios."
Every Friday a dashboard will be released updating the data, Robertson said.
Secretary to the Treasury Dr Caralee McLiesh said the seven Treasury scenarios published today were based on a range of times spent at different alert levels, the impact on economic activity at each alert level, and the degree of fiscal support.
"There are a wide range of possible impacts depending on which scenarios you look at.
"Annual average GDP growth is shown to fall by as little as 0.5 percent or as much as 23.5 percent in the fiscal year ending 30 June 2021, and estimates of the unemployment rate in the June 2021 quarter range from 5.5 percent to 22 percent. Two of the scenarios illustrate the cushioning effect of greater fiscal support on GDP and unemployment."
McLiesh emphasised these were not the Treasury view of what would happen but "indicative scenarios, based on assumptions and estimates subject to considerable uncertainty".
They provided an insight into some of the possibilities the government and officials would consider in planning Covid-19 responses and an economic recovery.
"Actual outcomes will depend on a range of factors, including the success of containment measures and the economic response, both in New Zealand and internationally."
McLiesh said the Treasury would publish up-to-date economic information and commentary every week.
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