Covid 19 coronavirus: GDP results officially confirm New Zealand in first recession in 11 years

New Zealand is officially in its first recession in 11 years, a victim of the fallout from Covid hitting economies around the world.

This country’s gross domestic product (GDP) fell by a record 12.2 percent in the June quarter, as the shutdown of Covid-19 and border closures paralyzed economic output.

It was the second consecutive quarter of negative growth, the technical measure of a recession.

The New Zealand dollar was unchanged after the news at US67.4c.

Economists had predicted a drop of between 11% and 14%.

However, the forecasts had improved dramatically since the border closures and the initial closure.

At the time, Treasury officials forecast a 23.5 percent drop over the period.

More recently, ANZ economists revised their pick, from a 17.5 percent drop to a 12.5 percent drop.

“Measures to contain COVID-19 have historically led to large falls in GDP in many parts of the world, and the results of countries reflect the nature and timing of their responses, and the structure of their economies,” StatsNZ said.

“New Zealand’s result compares with drops of 7.0 percent in Australia, 11.5 percent in Canada, 7.9 percent in Japan, 20.4 percent in the United Kingdom and 9.1 percent in the United States.”

The New Zealand border was closed to incoming international travelers on March 19, 2020 and remained closed for the entire June quarter of 2020.

Some industries were more affected than others by the border closure and alert level restrictions in effect during the June quarter.

“Industries such as retail, lodging and restaurants, and transportation experienced significant drops in production because they were more directly affected by the international travel ban and strict national lockdown,” said senior national accounts manager Paul Pascoe. .

“Other industries, such as food and beverage manufacturing, were essential services and fell much less.”

In the current GDP framework, formulated in 1987, New Zealand’s biggest drop was a 2.4 percent decline in the March 1991 quarter.

StatsNZ says that in the previous framework, dating back to 1955, the biggest drop was 4.4 percent, in December 1977.

New Zealand’s last recession ended in the June 2009 quarter.

On an annual basis, GDP fell 2 percent at the end of June 2020.

It was the first annual drop since 2010.

The speed and scale of COVID-19 response measures presented a number of measurement challenges in the June 2020 quarter, StatsNZ said.

When compiling GDP estimates, Stats NZ has used additional data and analysis to answer areas where the standard approach has limitations.

This additional work means that the impact of COVID-19 over the course of the quarter is accounted for as accurately as possible to produce reliable first estimates of GDP.

“Today’s results represent the first official estimate of general economic activity in the June quarter of 2020,” Pascoe said.

“As always, we look forward to refining and revising this initial view as more complete data becomes available.”

GDP estimates will be updated as more detailed but less timely information becomes available. This is in line with standard practice in New Zealand and internationally.