“The 12.2% fall in quarterly GDP is by far the largest on record in New Zealand,” the nationwide statistics company stated.
The reporting interval covers April to June, coinciding with a strict lockdown that started in late March and commenced easing in late Could.
Stats NZ spokesperson Paula Pascoe stated the closure of New Zealand’s borders since March 19 had additionally had a huge effect of some sectors of the financial system.
“Industries like retail, accommodation, and restaurants, and transport saw significant declines in production because they were most directly affected by the international travel ban and strict nationwide lockdown,” he stated.
“Other industries, like food and beverage manufacturing, were essential services and fell much less.”
The second-quarter decline follows a 1.6% contraction within the first three months of 2020, confirming widespread expectations that New Zealand is in recession.
Nevertheless, the 12.2-% determine was under the 16% predicted by the federal government this week and fell effectively wanting the 23.5% forecast within the funds final Could.
Finance Minister Grant Robertson stated the better-than-expected consequence was as a consequence of insurance policies carried out by Ardern’s authorities, which is able to go to the polls looking for a second time period on October 17.
“Going hard and early means that we can come back faster and stronger,” he stated.
“Economists expect the current September quarter to show a record jump back to growth in the economy.”
‘This was traumatic’
New Zealand has recorded solely 25 coronavirus deaths in a inhabitants of 5 million and instances have been largely contained since late Could, except for a flare-up in Auckland final month.
However the opposition Nationwide Celebration stated Ardern’s centre-left authorities had failed New Zealanders by failing to maintain the financial system transferring.
Nationwide’s finance spokesman in contrast the response to Australia, which recorded an financial contraction of seven% within the June quarter after adopting a extra versatile strategy to lockdowns and border controls.
“The lack of pragmatism and a clear plan from (Ardern’s) Labour has made the economic hole deeper and the impact harder than it needed to be,” he stated.
“This economic damage was recorded in three months but will last for decades to come — this is the deepest recession in living memory.”
New Zealand’s most up-to-date recession was in 2008-09 and till the primary three months of this yr, it had recorded continuous quarterly progress since 2010.
Kiwibank chief economist Jarrod Kerr stated the size of the June quarter decline was unprecedented.
“We’ve never seen anything like this. It was traumatic,” he stated.
“Service exports were stonewalled, and down 40% in the quarter, consumption was down 12%, and investment was slashed by 20%.”
However he stated the determine was a one-off that was set to be adopted by a progress surge of 10% within the September quarter, which might even be a report.
“Businesses and households have clearly adapted to trading in a world with the limited face-to-face contract,” he stated.