New Zealand on Tuesday said it would pump NZ$12.1 billion ($7.31 billion), or 4% of gross domestic product, into the economy to slow a contraction expected from business disruptions caused by the coronavirus outbreak.
The package was larger than that implemented in response to the global financial crisis and bigger as a proportion of GDP than those announced by countries like Australia and Singapore, Finance Minister Grant Robertson said in a news conference.
"We don't know what the full impact on New Zealand's economy will be, however, we do know it will cost us jobs and have a significant impact on business," Robertson said.
He said initial Treasury department forecasts showed the economy was expected to fall 1% by the first quarter of 2021 if the package is implemented, a slower contraction than the 3% forecast without the support.
The stimulus will also substantially increase debt, Robertson said, with core government debt now expected to exceed current New Zealand's target of 15-25% of GDP.
New Zealand Prime Minister Jacinda Ardern has warned the economic impact of the coronavirus could be greater than the global financial crisis as the country banned all big public gatherings and imposed mandatory self-isolation for visitors.
New Zealand's central bank cut rates by 75 basis points following an unscheduled meeting on Monday. The package included an initial NZ$500 million boost for health services, NZ$5.1 billion in wage subsidy support and NZ$2.8 billion in income support.
The package also included NZ$2.8 billion in business tax changes to free up cash flow, including a provisional tax threshold lift, the reinstatement of building depreciation and writing off interest on the late payment of tax.
A NZ$600 million initial support was also set aside for the aviation sector. In a speech to parliament, Robertson later said a recession was "almost certain" in New Zealand. "We will have an extended period of deficits and our debt as a country will have to substantially increase," he told lawmakers.