On the road to recovery

As restrictions have been lifted in both countries, activity has rebounded. Admittedly, the second draconian lockdown in Victoria will hold back the recovery in GDP in Australia in Q3 and Q4. But we expect the pace of recovery to pick up in the first half of 2021. On that basis, we expect output in Australia to return to pre-virus levels in the second half of 2021, around the same pace as in the US. By contrast, New Zealand’s success at containing the virus should see output recover more quickly in the near term. We think output will end this year just 3% below pre-virus levels. Thereafter growth will likely struggle as the border closure continues to weigh on tourism activity until at least the middle of next year.