The country's economists have been scribbling away furiously on new economic forecasts in an effort to keep up with the rapidly changing and darkening outlook.
And the new pictures the economists are drawing of the immediate and indeed medium term future are far from pretty.
ANZ economists are expecting a recession "and it won't be a shallow one".
The Westpac economists say the decision by the Government at the weekend to effectively close New Zealand's borders has "made a severe recession inevitable".
And BNZ's head of research Stephen Toplis, who is advising to "batten down the hatches - this is going to be a very rough ride", says the three quarters to the end of September this year are likely to deliver New Zealand "one of the sharpest drops in activity in living memory".
In terms of putting some numbers to these dire prognostications, the economists are having a go, notwithstanding the constantly moving situation.
ANZ's economists say their updated forecasts (finalised only on Friday) "are already out of date".
"We now expect a recession (defined as two quarters of negative growth), but it looks like it will be significantly deeper than the 0.5% contraction we pencilled in for the first half of the year – double the size [IE 1%] is now looking possible based on the immediate hit to travel and tourism."
Westpac's economists say the travel restrictions alone are going to knock 2.4% off New Zealand GDP in the June quarter.
"Social distancing is going to disrupt economic activity within New Zealand and around the world. The result will be an unavoidable and dramatic drop in demand for the products produced by some businesses, while others will be caught up in the general downdraught."
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'A game changer'
BNZ's Toplis says the decision ("and the right one") by the Government to effectively close our borders was a game changer.
"This has shut down international travel completely. The impact on the tourism sector and airports alone will knock around 6.0% off GDP. There is an offset in a GDP sense as there will be no visitor outflows either. Net these off and GDP still falls at least 2.0% from this source alone."
The ANZ economists say it's all not looking good for the economy, frankly, "and things could get a lot worse".
"The two risks we are particularly worried about are a community outbreak on our own shores or a dramatic escalation in global financial market stresses, both of which could have devastating economic consequences, necessitating much larger fiscal and monetary responses. Front-footing these risks is the best approach policymakers can take. The risk of overstimulating the economy would seem pretty close to zero at this point."
The Westpac economists say the hits to business revenue are going damage balance sheets.
'Preserving cash and surviving'
"Firms will concentrate on preserving cash and surviving, rather than expanding. The first example was Air New Zealand’s decision to axe 85% of its long-haul flight capacity and 30% of its domestic capacity. As businesses enter balance-sheet preservation mode, employment and investment will fall, compounding the economic downturn."
BNZ's Toplis says in addition to the impacts on the tourism sector and airports alone, other impacts could be added, including:
- The impact on all major sporting and entertainment events, including the broadcasters
- The film sector cans a number of productions
- Any business that relies on the international mobility of its staff is highly compromised
- Reduced investment activity through uncertainty
- Reduced household spending
- Inevitable job losses and reduced hours
"And all of this when the virus has not even taken hold in New Zealand, yet."
'Thankful for past fiscal austerity'
Toplis says we should be thankful to a string of past New Zealand governments (of all colours) who have maintained a degree of fiscal austerity.
"This has left the government with a balance sheet the envy of many with the capability to deploy its available resources in this crisis. That said, it remains imperative that the Government thinks long and hard before making its decisions and targets its spending very carefully. This could be a very long road and now is not the time to curtail your future options."
Kiwibank economists, who also see recession as "inevitable", expect to see some Large Scale Asset Purchases in New Zealand.
"The NZ Government has one of the strongest balance sheets in the world. Ironically, there isn’t enough bonds for the RBNZ to buy. But there could be, if the Government chooses to backstop struggling Kiwi business.
"Of the measures mentioned by the RBNZ, we believe the “term lending” option is best. Equipping banks with the necessary liquidity allows a targeted response to the affected businesses, to ensure they stay afloat. Of the RBNZ’s mentioned measures, term lending is the most targeted and done directly by the retail banks to affected businesses."
Support is important
ASB's chief economist Nick Tuffley said economically it is important to support not just the people affected by the virus but also to preserve their jobs for the recovery phase.
"That means affected businesses need to receive enough support from various quarters that they get through the coming disruption intact. The vast majority of businesses in NZ were in a sound position before the COVID-19 outbreak and will have good prospects again once behaviours eventually return to normal.
"The Government remains the most effective source of support and will announce a response package shortly. We call on the Government to put in place measures that can support the wider economy at large, in addition to the targeted approach it has taken to date. Measures are needed that will quickly get cash to the people and businesses that are going to feel financial pressure very shortly.
"In this environment of uncertainty and fear, it is important that people keep calm and make well thought out decisions."