IMF praises NZ’S financial response to Covid

The International Monetary Fund has praised the economy’s performance in response to Covid-19, but warns it is vulnerable to a housing downturn.

In its regular review of New Zealand, it said the Government’s swift moves to control the spread of Covid-19 and significant support for the economy have allowed a quicker than expected rebound in activity.

“On the fiscal side, I would particularly say the wage subsidy programme was very helpful during the initial lockdown and has helped a much, much worse labour market outcome,” IMF Australia NZ division chief Harald Finger said.

“It made sure that 60 per cent of wage earners in New Zealand could benefit from it and that actually is, from what we can see, is the highest coverage in the world.”

However, the IMF said the recovery had been uneven with job losses felt most among low-skilled workers, young people, women and people from ethnic communities.

Finger said active labour market policies, the reform of vocational training and expanding the eligibility of training subsidies would help support those affected.

The report noted the surging housing market could trigger a “pronounced correction”, which needed to be tackled with measures to dampen speculative demand and unlock supply. “Mitigating near-term housing demand, particularly from investors, would help moderate price pressures. Introduction of stamp duties or an expansion of capital gains taxation could reduce the attractiveness of residential property investment.”

To address long-term affordability the IMF recommended policies that freed up land supply, improved zoning and allowed housing developments to be fast-tracked.

In the near term, the IMF expected the economic growth would be moderate, wage growth would be slow and inflation would reach 2 per cent by 2023.

The IMF said while additional stimulus was not needed, monetary and fiscal support should not be withdrawn too quickly because significant risks remained.

Denmark, Iceland and Norway have paused their use of the Astrazeneca/ Oxford University coronavirus vaccine after someone who received it in Denmark died from a blood clot.

The countries yesterday suspended vaccinations using the jab while the incident is investigated.

Several other countries, including Italy, temporarily stopped using two different batches of the Astrazeneca vaccine, after reports in Italy of a “serious adverse event” and a death and illness in Austria.

However, the European Medicines Agency said there was no evidence of a link, stressing “the vaccine’s benefits currently still outweigh the risks”.

Magnus Heunicke, Denmark’s health minister, said the country was acting “on the precautionary principle” after the post-vaccine death.

“We cannot yet conclude that there is any connection,” he said. “We are taking action early and this will now be thoroughly investigated.”

Italy has also suspended its use of a batch of the Astrazeneca vaccine, labelled ABV 2856. There have been media reports of at least one death in a person after they received the jab. It stressed there was as yet no established link between the administration of the vaccine and the alleged side-effects.

A different batch of the Astrazeneca vaccines, ABV 5300, has been delivered to 17 EU countries. It has been linked to a death from coagulation disorders and an illness from a pulmonary embolism in Austria.

Austria, Latvia, Estonia, Lithuania and Luxembourg will temporarily suspend using this batch.

It is not yet clear which batch Denmark was using.

The European Medicines Agency is investigating, but stressed the number of “thromboembolic events” – marked by blood clots – was no higher among vaccinated people than in the general population. It said 30 cases had been reported among the 5 million vaccinated with the

Astrazeneca vaccine in the European Economic Area.

Dr Phil Bryan, vaccines safety lead at the British Medicines and Healthcare products Regulatory Authority, said 11 million doses of the Astrazeneca vaccine had been given in the UK, with no more reports of blood clots than in the unvaccinated population.

Telegraph Group Ltd