New Zealand is in its deepest recession in decades, following severe measures in response to the Covid-1
The country’s GDP decreased by 12.2% between April and June due to the blockade and closure of the borders.
It 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 rapid recovery.
The nation of nearly five million people was briefly declared virus-free, and while 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 the measures implemented since March 19 have had a huge impact on certain sectors of the economy.
“Sectors such as retail, accommodation and restaurants and transportation have experienced significant decreases in production because they have been most directly affected by the international travel ban and strict national blockade,” he said.
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Prime Minister Jacinda Ardern’s government has said that success in suppressing the virus will likely help the prospects for recovery.
Finance Minister Grant Robertson said GDP figures are better than expected and suggested a strong recovery in sight.
“Going hard and early means we can come back faster and stronger,” he said.
Some economists also predict 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, Westpac Senior Economist.
But the Treasury forecast released yesterday suggests massive debt and continued disruptions could 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.
New Zealand recorded a steeper decline than neighboring Australia, where the blockade was less severe.
But the state of Victoria faced a second lockdown, which is likely to weigh on Australia’s economic recovery.