In a speech to the Auckland Chamber of Commerce on Thursday, New Zealand Finance Minister Grant Robertson warned that New Zealand will experience a “short, sharp” economic hit.
The Australian and New Zealand Dollars are trading higher on Thursday on light-profit-taking and end-of-the-month position squaring. Mixed, but mostly lower trading in Asia Pacific stock markets could also be contributing to the slight rebound from Wednesday’s steep losses.
Nonetheless, the rapid global spread of the coronavirus kept investors on edge as they continued to shed risky commodity and trade-based currencies while seeking shelter in safe-haven government bonds.
At 08:09 GMT, the AUD/USD is trading .6562, up 0.0017 or +0.26% and the NZD/USD is at .6305, up 0.0016 or +0.26%.
The virus has driven an enormous flight of assets out of Asia as investors try to isolate themselves from both the outbreak itself and the cost of what has now been more than a month of paralysis in the world’s second-biggest economy, Reuters said.
New Zealand’s government said on Thursday it might need to pump money into its economy, where China accounts for about a quarter of exports, should the fallout cause a global recession.
Capital Economics now expects Chinese growth to contract this year.
“The economic risks from extended disruption are non-linear,” Capital’s chief Asia economist and its senior China economist, Mark Williams and Julian Evans-Pritchard, said in a note.
“The longer it continues, the more likely it is that some firms won’t be able to pay workers, and will have to either cut pay, lay people off or shut down altogether.”
In a speech to the Auckland Chamber of Commerce on Thursday, New Zealand Finance Minister Grant Robertson warned that New Zealand will experience a “short, sharp” economic hit.
“We meet today in the shadow of one of the biggest uncertainties that the global economy has seen in recent times,” he told those gathered.
He warned that the virus outbreak would have a “serious impact on the New Zealand economy in the short term”.
He stressed this point numerous times during his speech, making it clear that the economy would “rebound”, the New Zealand Herald reported.
In other news, Australia’s 10-year bond yield fell to a new record low of 0.845 percent after Australia’s Prime Minister Scott Morrison said risk of global pandemic is very much upon us, while urging the need to take action.
Additionally, Australia private capital expenditure dropped -2.8% in Q4, much worse than expectation of 0.5% increase. In seasonally adjusted terms, building and structures dropped -5.9%. Mining dropped -2.7%. Equipment, plant and machinery rose 0.8%. Manufacturing dropped -10.1% and other selected industries fell -1.9%.
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