As New Zealand has almost entirely eliminated the virus, domestic restrictions have been eased which has allowed activity and consumption to return to normal levels. We have therefore raised our GDP forecast this year. At the same time, the wage subsidy scheme has prevented mass lay-offs and we have lowered our forecast for the peak in the unemployment rate to 7%. However, that would still leave unemployment far above pre-virus levels so the RBNZ still has more work to do.
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