Trump’s travel ban on Europeans entering the US caught airlines, policymakers and travellers off guard. The effects on economic and financial markets have already been dramatic. Just what risks does the ban pose for New Zealand?
The following interview with Seven Sharp gives my immediate take on the implications for New Zealand in the hours following President Trump’s announcement.
The morning after this interview, I awoke to the news that many global financial markets had their biggest single day plunge since 1987.
Coronavirus now poses a crisis-trifecta: Public health, economic and a financial crisis. Markets will begin pricing in risk seriously and liquidity will tighten, particularly for corporates and banking systems across the globe where there were already some question marks.
Now is the time for decisive and co-ordinated central bank actions across the globe to reassure investors and depositors of the health of local banking systems. Assistance will also be necessary from a fiscal perspective, across taxation, targeted subsidies and other spending support.
New Zealand is well-placed from a banking stability perspective, but our banks still need to access international markets. The availability of credit is vital for small business in New Zealand, particularly in the current climate of severely impaired economic activity.