Economic Weekly: So near, yet so far

Vaccine news has continued to trickle out over the past week, with the news that yet another candidate – from Oxford University and AstraZeneca – has been successful in trials. It was a big positive considering it’s the first candidate that can be stored in normal refrigerators. However, the announcement was swiftly followed by controversy over the vaccine’s trial results in the subsequent days.

Elsewhere on the vaccine front, the US Food and Drug Administration is set to hold its hearings to approve the Pfizer-BioNTech vaccine in just over a week on December 10^th. Speaking last week, Moncef Slaoui, the Chief Science Advisor to Operation Warp Speed (the American vaccine development programme), was hoping to ship the first vaccines within 24 hours of that hearing. He also estimated the US could be “substantially back to normal” by summer 2021 (i.e. our winter), sooner than most would have expected just a month or two ago. Still, the vaccine rollout will be a major logistical exercise. Public health systems all over the world have been stretched by months of worsening outbreaks, and the first cab off the rank (Pfizer’s vaccine) needs to be stored at -70° temperatures. That means any measures to flatten the curve in the interim will be key – so it’s positive that the new lockdown restrictions in many parts of Europe appear to be helping slow the spread (see our chart of the week above).

On the domestic front, Q3 trade data out on Wednesday will provide a bit more detail about how NZ imports and exports are holding up. In our last Weekly, we highlighted the sharp global trade recovery over recent months, and the way that NZ imports have been more disrupted by COVID than our exports. We saw confirmation of that trend last week too, with the news that the NZ trade balance has expanded to its largest surplus since the 1990s, thanks to a sharp a fall in import values, but relatively resilient exports.

The other key releases from Stats NZ are around construction activity, with building consents data out on Thursday, and work put-in-place on Friday. We expect both results will show an expansion, further illustrating the strong housing market activity that’s come to take up so many newspaper column inches recently. Given our rapid price growth and chronic housing shortage, it looks like the housing market will come to be a major political hot potato in the new parliamentary term, especially as COVID recedes from view. On Page two of our weekly, Mark Smith shares some thoughts on where to from here for housing.