The New Zealand government believes it has a shot at keeping unemployment in single digits during the coronavirus crisis.
But left unchecked, the pandemic would have seen more than a quarter of the Kiwi workforce without a job.
A raft of Treasury modelling released on Tuesday shows a wide range of possible outcomes for the South Pacific nation, which is almost three weeks into a country-wide shutdown to fight the spread of COVID-19.
The modelling suggests the Kiwi economy, as a whole, will not recover coronavirus-induced losses until 2024.
But for now, the New Zealand government remains focused on minimising job losses, and is preparing further fiscal stimulus to assist with that aim.
It has currently spent around $NZ22 billion ($A21 billion) by boosting spending on wage subsidies, welfare payments, tax subsidies, injections into the health system and more.
With a further $NZ20 billion ($A19 billion) of targeted fiscal support, the modelling shows NZ’s unemployment figure peaking at 8.5 per cent in the June quarter of this year, falling back to 5.5 per cent next year.
The official unemployment rate prior to the pandemic arriving in New Zealand was 4.0 per cent.
Treasury Secretary Caralee McLiesh said GDP growth could fall by as little as 0.5 per cent this year or as much as 23.5 per cent.
The forecasts rely on New Zealand being able to untighten the screws of its severe lockdown next week, as hoped, and spend another month in a lessened lockdown.
The best-case scenario relies on borders being closed to foreign visitors “for up to 12 months”, but otherwise New Zealand can return to something close to normalcy.
On release of the figures, Finance Minister Grant Robertson admitted much of New Zealand’s prosperity was out of his control.
“This global pandemic is dramatically affecting countries and their economies around the world,” he said.
“We are seeing dire forecasts for global growth and unemployment levels rising rapidly in many countries. As an open export-led economy, New Zealand will feel these global effects for some time to come.”
But he maintained New Zealand was well placed to fight the worst effects of the pandemic “due to our strong public health system, low debt and growing economy”.
“The best way to protect the economy is to fight this virus … this will give our businesses and the economy the best chance to get going again on the other side,” he said.
New fiscal stimulus is expected to be released this week.
The NZ Cabinet meets on Monday, two days before the country’s lockdown is due to end, to decide on whether to extend, lessen, or regionalise its restrictions.
The budget is going ahead on May 14, with a scheduled September 19 election dependent on containment of COVID-19.
Also on Tuesday morning, New Zealand media giant NZME announced 200 job losses – around 15 per cent of its workforce – and remaining staff would be asked to take a pay cut.
Originally published as NZ modelling shows dire cost of COVID-19