New Zealand has fallen deep into a per-capita recession and policymakers are likely to make it even worse with contractionary fiscal and monetary settings. “Policymakers have locked themselves into procyclical monetary and fiscal policy which, while deepening the slump, should support bonds,” it said. “The asymmetry of fiscal policy (it is easier to spend than it is to cut) reinforces why fiscal policy should be used judiciously in macro stabilisation,” she said. “Though the New Zealand fiscal balance sheet is exceptionally healthy, the country itself remains highly dependent on international financing,” he said. In lieu of a policy strategy, it would eventually be a weaker New Zealand dollar that would do the work of narrowing the deficit.

Source: New Zealand Herald March 04, 2024 00:34 UTC