New Zealand Seeks to Limit Jobless Surge With More Stimulus

(Bloomberg) -- New Zealand’s government is preparing additional fiscal measures to limit a surge in unemployment as it battles the coronavirus, Finance Minister Grant Robertson said.

“Work on further significant government investment to protect jobs, support cashflow, and prepare the economy for recovery is well advanced,” Robertson said Tuesday in Wellington. Scenarios released by the Treasury department show that unemployment “can be kept below 10%, and return to 5% in 2021 with additional government support,” he said.

New Zealand is currently in a four-week nationwide lockdown that has brought the economy to a virtual standstill. The government is due to decide on April 20 whether the lockdown can end on April 22.

Fiscal measures to date, such as wage subsidies, amount to more than NZ$20 billion ($12 billion). Treasury’s seven different scenarios, which assume varying lockdown durations, include two that boost stimulus -- one by a further NZ$20 billion and one by NZ$40 billion.

Without additional government support, Treasury’s scenarios show unemployment jumping to at least 13% and as much as 25%.

Robertson said the next steps in the government’s plan to support businesses will be released later this week.

The May budget “is also another important part of the response, and it will include significant support to respond to and recover from COVID-19” he said. “As is usual with the budget, there may well be pre-announcements, especially where they relate to urgent COVID-19 response activities.”

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