As the COVID-19 (coronavirus) pandemic continues to wreak havoc around the world, experts believe that a recession is now more likely to occur.
Finder’s latest RBNZ Official Cash Rate (OCR) Survey revealed that all nine experts and economists believe a recession is on the way. Moreover, 55% of the respondents expect the recession to last until only the end of the year, while 33% predict that the recession would continue until mid to late 2021.
Debbie Roberts, an investment coach at Property Apprentice, said the economic recovery depends on how strictly Kiwis follow the government’s regulations around social distancing.
“If we don't follow the rules, we could easily find ourselves in for a very lengthy and painful recession. If we all do as we are told, then hopefully, we will be starting to show signs of recovery before the middle of 2021,” Roberts said.
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Almost all of the experts and economists commended the RBNZ’s latest emergency cut of 50 basis points, dropping the OCR to only 0.25%.
“The massive decrease was made to achieve the greatest psychological effect on people. People should recognise that RBNZ is prepared to take whatever action is necessary to ease monetary conditions” Alfred Guender, associate professor at the University of Canterbury, commented.
Dr. Oliver Hartwich, executive director of The New Zealand Initiative, added: “The RBNZ had no choice– the economic crisis is severe and requires every single policy lever.”
However, 44% of the respondents claimed that the government’s stimulus package of $12.1 billion meant to support businesses, welfare, and health care is not enough to save the economy.
“The government should be offering a lifeboat (grant) to all businesses and households in a sort of ex-post national pandemic insurance approach,” Michael Reddell, author of Croaking Cassandra, commented.