Weekly Global Economic Round-up - 26 November 2021

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Domestic Updates

  • On 24 November, the New Zealand Government announced(external link) the next steps in New Zealand’s plan to reconnect with the world, beginning from 16 January 2022. The new “medium-risk pathway” will gradually enable travellers to enter New Zealand using “home isolation” and additional health measures (i.e. vaccination, testing and a passenger travel history declaration), replacing the need for MIQ. This will be available to travel from all except higher risk countries (from which MIQ will remain a requirement) and a select number of low risk Pacific countries, with which we have quarantine free arrangements. Travel under the medium-risk pathway will be carefully staged. The first two steps are focused on the travel and return of New Zealand citizens (and those existing residence-class visa holders, and other travellers eligible for a border exception), first from Australia (from 16 Jan 2022) and then the world (by 13 February 2022, subject to health, social, and economic assessments and operational feasibility). All fully vaccinated individuals will be able to travel to New Zealand from 30 April 2022, with this phase possibly staged by visa category.
  • Separately, from early December, Brazil, Fiji, India, Indonesia, and Pakistan will no longer be classified as Very High Risk (VHR) countries. Papua New Guinea will continue to be classified as VHR due to the current in country Covid-19 surge.
  • On 2 December 11:59pm, all of New Zealand will move to the COVID-19 Protection Framework(external link). Auckland will move to Red. Settings for the rest of New Zealand are yet to be decided on. Further information will be released by the Government in the coming weeks.
  • The winners of this year’s Westpac Champion Business Awards were announced(external link) on 25 November. The annual awards ceremony has been running since 2003 and has evolved into one of the largest business awards ceremonies in Aotearoa New Zealand. The awards recognise and celebrate the excellence, innovation and success of businesses and not-for-profit organisations in Canterbury. (MFAT was a category sponsor for these awards).

Global & Multilateral Updates

  • New Zealand hosted the Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Week on 8-13 November, the pinnacle of New Zealand’s host year. Leaders announced the Aotearoa Plan of Action(external link) (APA), which acts as a blueprint for APEC’s work for the next 20 years. The Leaders’ Declaration(external link) and Ministerial Meeting Statement(external link) were also agreed to by all 21 economies, and included a range of commitments to the region’s post-pandemic recovery, such as promoting resilient supply chains, intensifying efforts to ensure goods – particularly essential medical supplies such as vaccines – and the services that support their movement continue to flow, boosting border agency cooperation, and continuing information exchange and coordination measures related to cross-border movement of people. The voice of business featured strongly throughout Leaders’ Week, with the APEC Business Advisory Council ABAC-Leaders’ Dialogue and APEC CEO Summit both important fora to discuss challenges and opportunities from a business perspective.

Regional Updates

Australia and the Pacific

  • Minister for Trade and Export Growth Hon Damien O’Connor recently visited Australia, the first visit by a Trade Minister from any country to Australia since the pandemic began, and followed a week after Foreign Minister Nanaia Mahuta’s visit to Sydney. Minister O’Connor had substantial talks with Australian Trade Minister Dan Tehan in Melbourne, followed by a press conference(external link). He also met with a number of other Australian Federal ministers, businesses, primary sector groups, and think tanks.
  • Fully vaccinated holders of eligible visas will be permitted(external link) to enter Australia without having to seek a travel exemption from 1 December.  Such travellers must comply with the quarantine requirements of the state/territory they are entering, and any other state/territory to which they plan to travel. Fully vaccinated citizens of Japan and the Republic of Korea will also be able to enter Australia from 1 December without needing to seek a travel exemption, provided they hold (any) valid Australian visa.
  • On 11 November, Fiji reopened its international borders after nearly two years. Fully vaccinated diplomats, returning Fijian residents, permit holders and those approved by the COVID-19 Risk Mitigation Taskforce are now permitted to enter Fiji. Fully vaccinated tourists (who meet entry conditions such as testing) from travel partners including New Zealand, Australia, the United Kingdom and the United States can enter Fiji from 1 December, and will not be subject to quarantine, aside from a 48-hour stay in an approved hotel until a negative PCR test is returned.

Asia

  • In its annual report on India, the IMF warned that a persistent negative impact of Covid-19 on investment, human capital, and other growth drivers could prolong the recovery and impact medium-term growth. The IMF projected India’s economic growth at 9.5% for the current financial year and the headline consumer price inflation-based inflation at 5.6% amid elevated price pressures. The services sector, which took the biggest hit when the COVID pandemic hit the country last year, staged a strong growth in October, driven by an uptick of demand and sentiments ahead of the festive season. Merchandise exports continued to remain robust in the month of October, rising 42% year-on-year to US$35.47 billion. The growth was driven by higher demand for items such as engineering goods, petroleum products, gems and jewellery as well as organic and inorganic chemicals.

Europe

  • After contracting 0.5% in Q1, Spain’s economy returned to positive territory in Q2 (1.1%), sustained mainly by robust domestic demand, especially private consumption. Various negative factors including (ongoing) disruptions in global supply chains, bottlenecks and rising energy prices could undermine recovery if they persist over time.
  • On emerging trends, MFAT has issued report on the steady growth in consumption of plant based products in Spain. Spain’s plant-based milk market is comparatively more developed than others but dairy alternatives like cheese, ice cream, yoghurt or butter/margarine are under-served market segments with considerable scope for growth. Government messaging that Spaniards must reduce their meat consumption may dampen the Spanish market´s appetite for imported meat. A full report is available here(external link).

Americas

  • Australian company Fortescue Future Industries has announced plans to invest up to US$8.4 billion to produce green hydrogen on an industrial scale in Rio Negro in Argentina. Former captain of the Argentine rugby team and current Latin America head of Fortescue Future Industries, Agustin Pichot, said that the project would be one of the company's most important worldwide. A US$1.2 billion pilot stage aiming to produce 35,000 tons of green hydrogen is expected to start in 2022 and end in 2024. The first productive stage, with an estimated investment of US$7.2 billion, would run until 2028 and aim to have an output of 215,000 tons of green hydrogen. The Argentine Government has described this as “the most important international investment in [Argentina] in the last 20 years.
  • From 1 December, Chile will look to reopen three land border crossings (the main highways to Peru and Bolivia, and a southern pass with Argentina). Chileans and resident foreigners without a vaccine pass will no longer need to apply for special permission to travel internationally. On-arrival testing and quarantine requirements will be eliminated for all travellers that have received a booster dose in the six months prior to arrival (and hold a local vaccine pass). Measures remain in place for other travellers (though the quarantine for travellers without a vaccine pass has been shortened to 5 days, while those with a pass are now able to travel onwards, including on public transport, to their place of accommodation or residence while awaiting a negative result to lift their quarantine.

Middle East and Africa

  • The South African economy recovered more quickly than expected in the first half of 2021. This recovery reflected less stringent COVID-19 restrictions and lower interest rates, along with support from strong international demand and higher commodity prices. National Treasury is now expecting 5.1% growth in 2021, and the International Monetary Fund has also announced a revision upwards for South Africa's growth outlook from 4% to 5%. However, output remains below pre-pandemic levels, and Statistics South Africa’s (Stats SA) sectoral breakdown shows that the country’s economic recovery remains uneven, with growth of transport and communication activity by 6.9%, agriculture 6.2%, trade 2.2% and mining 1.9% in Q2 2021.
  • Business confidence is improving (aside from a dent caused by the unrest in July), with 82% of South African CEOs confident about growth prospects for South Africa. 50 South African chief executives across ten industries surveyed in KPMG South Africa’s 2021 CEO Outlook were more optimistic: 82% are confident about growth prospects for South Africa and 90% are optimistic about growth prospects of their own companies, compared with 87% internationally. Overall confidence has returned to pre-pandemic levels of early 2020. When asked which risks posed the greatest threat to their organisation, 24% and 6% identified supply chain risk and operational risk respectively (compared to 18% and 8% respective benchmark).

Market reports released this week

External links

The following links may provide useful information to businesses:

  • NZTE(external link) has a website focused on providing COVID-19 information for exporters. They’ve also launched myNZTE(external link), an interactive digital portal of insights and tools available to all New Zealand exporters.
  • The Treasury releases a weekly economic update(external link) every Friday. Stats NZ has published a data portal(external link) with near real-time economic indicators.
  • MBIE publishes a sector reports series(external link) which provides regularly updated reports on all industry sectors that make up the New Zealand economy. These include official economic data and the challenges and opportunities that face New Zealand’s industry sectors.
  • govt.nz(external link) provides tools and advice from across government to save small businesses’ time and help make the business a success.
  • MFAT has created a tariff finder(external link) which is designed to help goods exporters and importers maximise benefits from New Zealand’s Free Trade Agreements and compare tariffs in 136 other markets.
  • The all of government Trade Barriers website(external link) can be used to register any trade barriers experienced or issues exporting to an offshore market. Queries can be sent via the website or through the MFAT Exporter Helpline 0800 824 605. Enquiries will be sent to the government agency best placed to answer.

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Disclaimer

This information released in this report aligns with the provisions of the Official Information Act 1982. The opinions and analysis expressed in this report are the author’s own and do not necessarily reflect the views or official policy position of the New Zealand Government. The Ministry of Foreign Affairs and Trade and the New Zealand Government take no responsibility for the accuracy of this report.

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