As the economy shrinks to a historic 12%, New Zealand plunges into recession

As the economy shrinks to a historic 12%, New Zealand plunges into recession

Business

The economy of New Zealand plummeted into recession for the first time on Thursday in a decade, reporting a historic contraction in the June quarter because of the coronavirus pandemic, as Prime Minister Jacinda Ardern heads into the general election next month. “The 12.2 percent decrease in quarterly GDP is by far New Zealand ‘s highest on record,” said the National Statistics Department.

The reporting period covers April to June, coinciding with a tight lockdown that started at the end of March and started to ease in late May. Stats NZ spokesperson Paul Pascoe said the closing of New Zealand ‘s borders after March 19 has had an immense effect on certain economic sectors. “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 said.

The 12.2 per cent result, however, was below the 16 per cent expected by the government this week, and fell well short of last May’s 23.5 per cent budget forecast. Finance Minister Grant Robertson said the better-than – expected result was attributed to policies adopted by Ardern ‘s government, which will go to polls on October 17 to seek a second term.

Jason Amato

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