New Zealand falls into worst recession on record
New Zealand has fallen into the worst economic recession on record in the second quarter, as well as its first recession in more than a decade.
GDP in the country contracted a seasonally adjusted 12.2 per cent between April and June compared to the previous quarter, marking its steepest quarterly contraction since records began. It fell 12.4 per cent from the same period in 2019.
The figures were largely in line with forecasts of a 12.8 per cent decline from economists polled by Reuters. However it was an improvement on earlier forecasts from New Zealand’s central bank of 14 per cent.
The fall was caused by the impact of the coronavirus pandemic, as business activity ground to a halt and its borders were shut for two months.
Economists remained optimistic of New Zealand’s future, despite the gloomy data.
“We expect the June quarter’s record-breaking GDP decline to be followed by a record-breaking rise in the September quarter,” said Westpac senior economist Michael Gordon.
The figures come as New Zealand prepares to head to the polls next month, with Prime Minister Jacinda Ardern intending to defend her seat.
Ardern’s government said the country’s success in containing the spread of the virus through strict local lockdown measures bodes well for the economy’s recovery.
New Zealand’s current coronavirus death toll compares favourably to other nations, with 25 Covid-19-related deaths out of a population of 5m people since the pandemic began.
“Success for me is saving people’s lives, supporting and saving people’s businesses, coming out the other side faster, quicker and with more activity,” she said.
New Zealand’s central bank is scheduled to hold a meeting on 23 September, at which analysts expect it to hold interest rates at a record low of 0.25 per cent.