3 Reasons Why You Shouldn’t Replace Credit Managers with Automation
21 Dec, 2018
By automating your business processes, whether it’s in the application process, risk-assessment process or simply driving best practices…
New Zealand is not one of the world’s powerhouse economies. Compared to the US, which has begun the countdown to its own elections later this year, the outcome of September’s New Zealand elections will have a relatively small impact in global terms.
That said, the New Zealand elections will be closely watched if only because New Zealand has stood out globally by its relative success so far in curbing the spread of Covid-19 we are seeing in major economies around the world.
At this stage, although the current Labour Party coalition government would appear to be well-placed to win the elections, the result may be much closer than expected because the long term, and still not solved, issue for any New Zealand government remains how to come up with a formula for re-opening the country’s borders safely to the outside world.
But there can be no doubt that whoever wins the election, we can expect they will keep the money tap turned on. In an era where global interest rates are at record low levels, most governments in a position to do so are likely to keep their credit lines relatively open.
New Zealand under Labour has already committed to spend around 21.3 percent of GDP in responding to Covid-19. As a percentage of GDP, this is high by global standards, but it reflects the fact that the country was in a relatively good position going into the crisis.
A recent article on Stuff News noted that direct spending by central government agencies was not the only way money is being sourced. Off budget measures – eg, the government has also spent the equivalent of about $12.4 billion in loan guarantees to Air New Zealand, and other small businesses – are also significant. That said, compared to many countries, such as the US, Australia and Germany, where states also have a considerable amount of discretionary spending, the New Zealand scenario is relatively under control. No matter who wins the New Zealand elections, spending is unlikely to change very much.
There are signs that in some New Zealand sectors big ticket investing has dropped off, given the business uncertainty. But perhaps surprisingly, the property market has been reasonably strong. This may reflect the fact that New Zealand is not currently officially in lockdown, meaning many transactions that were put on hold have now flowed through the system, unlike say in the US, where in many states real estate transactions remain effectively frozen.
A recent article in Forbes Magazine quoted leading real estate agents as saying that real estate’s clobbering by Covid-19 has run “wide and deep”. The effects of real estate’s upending further downstream have been equally swift. Uncertainty was now housing’s greatest future risk, said Forbes.
“The Covid-19 pandemic is really teaching us how we need to adjust and learn new ways to transact in this business,” Peggy Olin, President and CEO of Miami’s OneWorld Properties told Forbes. “Transitioning into the digital and virtual world is more important now than ever.”
In New Zealand, newspaper reports have noted that New Zealand’s Covid-19-free status has fuelled inquiries from overseas and some people are buying houses without seeing them. Listings website Realestate.co.nz says there seems to be a link between publicity about New Zealand’s Covid-19 status and surges of interest in local property from offshore buyers. But tight border controls are likely to prevent any immediate mass movement into New Zealand by overseas buyers – even when they are returning New Zealanders.
Independent New Zealand economist Tony Alexander, in his early August commentary, said he read the data as showing market strength being likely to continue. “What these housing numbers say to me is that the recent market strength looked set to continue and in locations of any reasonable size and turnover the chances were high that prices would creep higher during 2021,” he says.
“[New Zealand] is not over-supplied with housing as happened in the US, Ireland, Portugal, Spain, and a few others ahead of the Global Financial Crisis,” he says. “Will interest rates jump up soon after I get in debt with a mortgage? No. Rates are at record lows….But mainly, the world economic outlook is weak, inflation is quiescent, and even before Covid-19 there had been structural changes in our economies suppressing inflation and delivering a sustained low interest rate outlook.”
For countries like Australia – now suffering from a renewed Covid-19 surge in some areas – the situation remains less clear. As for South East Asia, their economic performances and success or otherwise in curbing Covid-19 remain highly varied and mixed. But for credit providers in New Zealand, Australia and Southeast Asia, although governments may change and there may be some tweaking in consumer credit and lending conditions, at this stage major changes seem unlikely.
Note that Credisense’s no-code software solutions can keep up with and respond to any changes and quickly execute credit decisions. See: www.credisense.co.nz