New Delhi (NVI): New Zealand fell into its deepest economic slump on record in the second quarter as its battle against the coronavirus pandemic paralysed business activity, according to official data.
The country’s GDP shrank by 12.2 per cent between April and June as the lockdown and border closures hit.
The GDP data confirms New Zealand’s worst recession, defined as two straight quarters of contraction, since 2010, with GDP in the March quarter falling 1.6 per cent.
This is New Zealand’s first recession since the global financial crisis and its worst since 1987, when the current system of measurement began. But the government hopes its pandemic response will lead to a quick recovery.
The Reserve Bank of New Zealand had forecast a quarterly and annual GDP decline of 14 per cent in its August statement.
Growth has been hit by a standstill in economic activity as a strict nationwide coronavirus lockdown in April and parts of May forced almost everyone to stay at home and businesses to shut.
The nation of nearly five million was briefly declared virus free, and although it still has a handful of cases, it has only had 25 deaths.
The economy is likely to be a key issue in next month’s election, which was delayed after an unexpected spike in Covid-19 cases in August.
Industries such as retail, accommodation, restaurants and transport saw significant declines; as did construction and manufacturing at 25.8 per cent and 13 per cent respectively. Household domestic spending dropped by 12 per cent.
Annually, GDP fell by 2 per cent – the first annual decline since the March 2010 quarter, according to media reports.
New Zealand’s economic retraction is higher than Australia’s 7 per cent and Canada at 11.5 per cent, but much less than in India, Singapore and the UK.
Meanwhile, Finance Minister Grant Robertson said the GDP numbers were better than expected, and suggested a strong recovery ahead. “Going hard and early means that we can come back faster and stronger,” he said.