New International Monetary Fund projections show the depth of pain New Zealand’s economy will feel due to the coronavirus, forecasting a contraction on 7.2 per cent this year.
The IMF’s World Economic Outlook, released overnight, says the spread of COVID-19 will shrink the global economy by three per cent in 2020 before a major bounce back in 2021.
The IMF believes New Zealand will see the biggest fall outside of Europe, except for Venezuela, an economy already in freefall.
Australia’s forecast contraction isn’t far behind at 6.7 per cent.
The IMF’s chief economist Gita Gopinath said “it is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago”.
“The Great Lockdown, as one might call it, is projected to shrink global growth dramatically,” she said.
“A partial recovery is projected for 2021, with above trend growth rates, but the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound.”
New Zealand’s 2021 growth is projected to be 5.9 per cent, meaning the South Pacific country will regain most of its 2020 losses, but end up behind where it might have been.
The Kiwi economy was growing at slightly above OECD average prior to the arrival of coronavirus at 2.3 per cent in 2019.
Countries that New Zealand regularly compares itself to are also in for their fair share of pain.
The United Kingdom (-6.5 per cent), Ireland (-6.8 per cent) and Canada (-6.2 per cent) will all shrink before rebounds next year.
THE GREAT LOCKDOWN: IMF PROJECTIONS FOR GROWTH
Australia: -6.7 in 2020, +6.1 in 2021
New Zealand: -7.2 in 2020, +5.9 in 2021
UK: -6.5 in 2020, +4.0 in 2021
Canada -6.2 in 2020, +4.2 in 2021
Ireland: -6.8 in 2020, +6.3 in 2021
Originally published as The ‘Great Lockdown’ shrinks NZ economy