New Zealand May Cut Rates in Gloomy Environment

ANZ Bank has revised its outlook on New Zealands economic growth due to risks posted by public health emergency.

ANZ Bank previously expected New Zealands economy to grow by 0.8% in the first half of 2020, and later revised to 0.1% shrinkage in Q1 and 0.5% growth in Q2. The bank observed that New Zealand is quite resilient against the risks of public health emergency, with the only challenge right now being pressure over its supply chains. But if the risks remain, New Zealand may face a larger problem.

Market estimates that the Reserve Bank of New Zealand will reduce interest rate to 0.75% by September.

New Zelands economy is highly dependent over the international community, while its global debts have also reached a record high. Currently, both businesses and consumers in New Zealand are facing signs of possible recession. The last time New Zealand was caught in a recession was during the global financial crisis in 2008 and by the end of the crisis in 2009, at least 67 local financial companies closed down while home sales fell by 42%, and the official cash rate was also cut by RBNZ from a record high 8.25% to 2.5%.