NZ Trade Balance (December) recovers from $-4.85B to $-4.31B, NZD/USD mostly unchanged
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New Zealand announces nz$12.1 bln economic package in response to COVID-19

New Zealand announces NZ$12.1 bln economic package in response to COVID-19.

Key notes

Economic package accounts for 4% of GDP, larger than response to global financial crisis.
NZ govt to invest nz$500 mln on healthcare, nz$5.1 bln on wage subsidies, nz$126 mln on leave and self-isolation support.
NZ govt support includes nz$2.8 bln income support package; nz$2.8 bln in business tax changes.
NZ govt measures include nz$600 mln initial support for aviation sector.
Finance minister Robertson says a recession in New Zealand is almost certain.
Finance minister Robertson says many new Zealanders to lose jobs and some businesses will fail.
Finance minister says treasury foreceasts show with the package annual growth will drop to 1% by Q1 2021.
Finance minister Robertson says debt will substantially increase; core crown debt will go over 15-25% target.
Finance minister Robertson says this year’s budget to be the second phase of broader recovery package.

FX implications

The NZD has been stabilising vs the greenback and higher vs the rest of the dollar bloc currencies, with AUD/NZD bears stepping back in since the correction of the lowest levels since 2015, with eyes for a break below 1.0020.



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