ASB's latest Quarterly Economic Forecast predicts just a 3 per cent annual GDP decline by year end – a significantly better outlook than the 6 or 7 per cent predicted in March.
The forecast points to New Zealand's 2020 economic outcome being similar to Australia's, with both countries benefiting from China's rebound, although Australia's 2021 recovery is expected to be stronger given New Zealand's ongoing border constraints.
"Fear of losing jobs has quickly given way to fear of missing out on a bargain or some fun, and the sheer degree of support the economy has received means the country has fared far better than previously expected," said ASB chief economist Nick Tuffley.
"Globally, New Zealand is faring better in 2020 than many developed countries, with estimated annual declines of seven per cent in the EU and 11 per cent in the UK, compared with our forecasted 3 per cent in New Zealand."
In the first six months of the year, New Zealand's economy contracted 13.4 per cent as a result of the strict four-week lockdown, however, a smoother than expected exit from lockdown and return to normality has seen Kiwis reaching for their wallets.