Economic Weekly: Bringing out the f-word

What seem like inconsequential decisions at the time can ripple through to have major consequences.  A decision Saturday to defer a zoo visit until Sunday triggered an awkward explanation in the morning to a houseful of expectant kids, with some frustration about “coronavirus” manifesting at times during a more housebound day.  That scene played out in a much more serious scale for the country over the weekend as events were abruptly cancelled in response to the continued growth in the current community cluster, with “frustrating” being the official word from the top to describe what has led NZ back into this week’s lockdown restrictions.

Our back-of-the envelope mechanical calculations suggest L3 Auckland/L2 elsewhere lockdowns carry a weekly cost of around $240 million – though note this estimate does not account for any catch-up activity after lockdown conditions get loosened.  This lockdown (Lockdown 3.1 or 4.0?) is likely to be proportionately larger in its impact than the mid-February one, as it includes parts of 2 weekends.  It is the services sector – particularly hospitality and events – that bears the brunt of the impact, even if contactless sales do enable some venues to open during people’s leisure time.

That sum could be well off the mark.  Nevertheless, it serves to highlight the value in spending money to do what we can to minimise the ‘human factors’ part of the whole process, to ensure that the right people isolate appropriately and they are supported while they make a sacrifice for the wider community.  Life in a time of pandemic is a constant learning opportunity – let’s hope we can collectively refine how we manage our way through.  It’s a long time to hold on until the next season of Bridgerton is out.

The data calendar has a few updates this week for how some of NZ’s more robust sectors travelled through the closing stages of last year and early parts of this year.  Our goods Terms of Trade (export prices relative to import prices) should show a Q4 lift of around 1.7%.  That would put NZ’s international purchasing power back only 3% below the record high set just last year.  That’s a pretty impressive performance in the midst of a global pandemic and it’s helping to offset the hit to export sectors bearing the brunt of the continued border closure.  Building activity is another area of the economy that has held up.  Friday’s building work put in place release will show whether the sector continued to grow after rebounding sharply post-lockdown, with non-residential work still having scope for more catch-up.  Wednesday’s building consent figures will provide an update on the pipeline of work that will get underway this year.  Unsurprisingly, residential consents have been on a tear of late given the heat in the housing market. nick.tuffley@asb.co.nz

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Mark Smith

Senior Economist

Mark joined ASB in 2017, with over 20 years of public and private sector experience working as an economist in New Zealand and the UK.

His resume includes lengthy stints at ANZ and the Reserve Bank of New Zealand, and he has also worked at the Bank of England, HM Treasury and the New Zealand Transport Agency. Mark's areas of specialisation include interest rate strategy, macro-economic analysis and urban economics.

Born and bred in the Waikato, Mark studied at Waikato University where he graduated with a Master of Social Sciences, majoring in Economics.

Mark's key strengths are the ability to use his extensive experience, inquisitive nature, analytical ability, creativity and pragmatism to dig a little deeper and to deliver common sense solutions to tackle complex problems.

When not at work Mark likes to travel, keep fit and spend time with his friends and family.