NZ’s Bright Spots Amid Tough Employment And Business Confidence Scenario

Article – Jagriti Gupta

New Zealand has managed to stay ahead of the curve with strong control over Covid-19 infection spread, while it fully gears up to conquer another critical challenge of speeding up the economic recovery.The Ardern Government’s Covid-19 policy response, often touted as ‘strictest lockdown measures’, has helped the nation to flatten the pandemic curve. The country now stands in an advantageous position to leverage its fast recovery for boosting the economic revival.

With effect from 29 May 2020, the Government rolled out another progressive development in moving to Alert Level 2 allowing public gatherings up to 100 people, while hospitality businesses can accept group bookings of more than ten people.

While business operations are coming back into action and people are returning to work, unemployment scenario and low business confidence are major cause of concerns for policymakers.

ANZ Bank Survey has pointed out that 40% of the surveyed organisations are still planning the job cuts. Moreover, the level of pessimism, represented by percentage of respondents expecting economic deterioration over a year, marked slow improvement to 41.8% in April 2020 from 66.6% in the last year’s April poll.

The data from Statistics New Zealand is rather more disheartening as it indicates massive fall of 37,500 jobs during April, largest in over 20 years. While, total filled jobs marked a dip of 1.7% on M-o-M basis.

However, the NZ Treasury has affirmed confidence in the economy’s potential to possibly arrive back to the Pre-COVID scenario in around two years. Let us look at some of the bright spots that seem to be fuelling up the economic revival of Kiwiland.

Equity Market Riding High

While market players are eyeing the US-China spat over virus and Hong Kong rule, NZ equity market drove 0.2% high on Friday, closing at 10,882.41 points. Resonating positive investors’ sentiments, S&P/NZX 50 Index has posted 12.32% gain on QTD basis as on 29 May 2020.

While, Allied Farmers Limited (NZX: ALF) gave an intraday return of 11.67% to last trade at $0.670 on 29 May 2020, cinema software company Vista Group International Limited (NZX: VGL) rose 7.1 per cent to $1.50. Besides, Tourism Holding Limited (NZX: THL) continued its rally for the third consecutive day as the share price rose by 1.73% to close at $1.760.

Technology company Rakon Limited (NZX: RAK) saw a rise in its stock price by 10.42% intraday to $0.265, while the share price of digital payments company Pushpay Holdings Limited (NZX: PPH) rose by 8.04% to close at $7.660 on 29 May 2020.

Kiwi Climbing Up the Charts

Mirroring equity market gains, NZD was trading at 62.03 cents by the close of market trading on Friday. Post bottoming out at 54.70 cents on 19 March 2020, domestic currency can be seen to be gaining some strength on the charts.

However, further currency gains need to be gauged amidst Trump’s latest threat of stripping preferential treatment of Hong Kong over Beijing’s proposal of new national security legislation.

Success against Health Crisis

New Zealand marked one of its greatest triumphs against the unseen foe with the discharge of its last Covid-19 patient from the Auckland hospital on Thursday. Meanwhile, the nation for the eighth day in a row did not see any new Covid-19 case, making it a ‘safe haven’ in the infection-ridden world. As per the latest update by the Ministry of Health on 30 May 2020, only a single active case remains in the country out of the total 1,154 confirmed cases recorded so far.

The aggressive ‘elimination strategy’ of Jacinda Arden-led Government has rekindled hopes for early economic progress with the re-emergence of business activities around the nation.

Abundant Harvest Strengthening Trade Outlook

Notably, the international demand for New Zealand’s dairy products and Kiwifruit dominated the $5.3 billion NZ exports in April 2020. Under Alert Level 4, the wine growers continued their harvesting as the industry was classified under the ‘essential service’ list. The uninterrupted harvesting and the government’s support through the wage subsidy scheme has ensured a bumper harvest. Meanwhile, the produce of the ‘Golden fruit’ also remained quite high.

The high yield amidst economic downturn rebuilds economic revival hopes given robust trade surplus.

Resilience through Technology

Amidst strict lockdown measures, technology remained at the forefront minimising the communication barriers and paving the way to sustain business activities.

While New Zealand’s contact tracing app recording 446,000 registrations as on 29 May 2020 gained popularity among the masses, the technical stimulations reinforced confidence in the economic recovery.

Veovo has launched solutions that combine sensor technology, intelligent automation and machine learning for managing passenger flow and density in trains and transit stations. It would ensure safe distancing necessary to avoid infection. Meanwhile, Spark (full name) has rolled out 5G fund worth $625,000 to propel up to four businesses for developing 5G applications.

Spark’s Marketing Director Matt Bain said the company is expanding the focus of the fund on ‘5G-enabled health technology’ for fostering recovery.

Amidst these growing technological trends, demand has emerged for up-skilling the employees to suit the new high-tech paradigm.

International Vaccine Development Programs

The drug companies are in a race against the time to develop the vaccine or cure for the fatal coronavirus pandemic. Technical Lead for the WHO’s Health Emergency Program, Maria Van Kerkhove on 15 May 2020 indicated that ‘hundreds of clinical trials’ are underway across the world, while WHO has also launched ‘Solidarity Trial’ for testing the efficacy of existing therapeutics against SARS-CoV-2.

While Moderna and Novavax are some of the prominent players progressing on clinical trials of vaccine candidate, global pharmaceutical lead Merck has collaborated with IAVI to develop an investigational vaccine to be used for the prevention of COVID-19.

The success of the ongoing anti-coronavirus drug development could throw out the fears of second wave of infection while overall empowering the world to bring an end to the coronavirus era.

While NZ’s economy and equity market are holding up some gains amidst volatile scenario with businesses adopting advanced tech models to stay afloat, global geo-political concerns along with duration and nature of virus containment need to be gauged while looking at future growth scenario.

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