Sally Furniss
Well-known member
Economy unlikely to face big swine flu shock
Finance Minister Bill English says swine flu represents "one more bend in the road to recovery," but the economy faces significantly larger challenges.
Treasury suggests a severe pandemic could cut Gross Domestic Product by 5% to 10% in the first year and warns the economy's ability to cope with further serious shocks is currently weak.
The Treasury advice is based on a worst case scenario of 40% of the population infected, of whom 2% die.
Government revenue would suffer, while spending would increase - meaning more debt.
The paper also outlines the powers available to manage a severe, prolonged pandemic, including playing a role distributing certain goods and services, price controls and suspending or overruling contracts.
Mr English says the Government does not believe the worst-case scenarios are likely to eventuate as swine flu appears to be a relatively mild illness. The Government has not investigated emergency economic powers in any depth, he says.
Westpac Bank is estimating that swine flu could cut 1% to 2% from New Zealand's economic growth over the next year which may lengthen the recession by another two of quarters.
The main disruption will be people taking time off work, avoiding contact with one another and the impact on business and consumer confidence, according to the bank's economists.
http://www.radionz.co.nz/news/stories/2009/06/19/1245b6365fb6
Finance Minister Bill English says swine flu represents "one more bend in the road to recovery," but the economy faces significantly larger challenges.
Treasury suggests a severe pandemic could cut Gross Domestic Product by 5% to 10% in the first year and warns the economy's ability to cope with further serious shocks is currently weak.
The Treasury advice is based on a worst case scenario of 40% of the population infected, of whom 2% die.
Government revenue would suffer, while spending would increase - meaning more debt.
The paper also outlines the powers available to manage a severe, prolonged pandemic, including playing a role distributing certain goods and services, price controls and suspending or overruling contracts.
Mr English says the Government does not believe the worst-case scenarios are likely to eventuate as swine flu appears to be a relatively mild illness. The Government has not investigated emergency economic powers in any depth, he says.
Westpac Bank is estimating that swine flu could cut 1% to 2% from New Zealand's economic growth over the next year which may lengthen the recession by another two of quarters.
The main disruption will be people taking time off work, avoiding contact with one another and the impact on business and consumer confidence, according to the bank's economists.
http://www.radionz.co.nz/news/stories/2009/06/19/1245b6365fb6
