New Zealand is in its deepest recession in decades, following stringent measures in response to the Covid-19 pandemic that have been widely hailed.
The country’s GDP fell 12.2% between April and June as a result of the lockdown and border closures.
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 response to the pandemic will lead to a speedy recovery.
The nation of nearly five million people was briefly declared virus-free, and although it still has a handful of cases, it has only had 25 deaths.
The economy will likely be a key issue in next month’s election, which was delayed after an unexpected spike in Covid-19 cases in August.
Stats NZ spokesman Paul Pascoe said measures implemented since March 19 had had a huge impact on certain sectors of the economy.
“Industries like retail, accommodation and food services, and transportation have seen significant production declines because they have been most directly affected by the international travel ban and strict national lockdown,” did he declare.
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The government of Prime Minister Jacinda Ardern has said that successful removal of the virus is likely to help the prospects for recovery.
Finance Minister Grant Robertson said GDP numbers were better than expected and suggested a strong recovery.
“By going hard and early, we can come back faster and stronger,” he said.
Some economists are also predicting a rapid recovery, due to New Zealand’s strong response to the virus.
“We expect the record decline in GDP in the June quarter to be followed by a record increase in the September quarter,” said Michael Gordon, senior economist at Westpac.
But the Treasury forecast released yesterday suggested massive debt and continued disruption would likely delay a full recovery.
The national opposition party accused the government of a lack of pragmatism that made the impact worse than it should have been.
New Zealand saw a steeper decline than neighboring Australia, where the lockdown was less severe.
But the state of Victoria has faced a second foreclosure, which is expected to weigh on Australia’s economic recovery.