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Finance Minister Grant Robertson said gross domestic product statistics showing the biggest drop in quarterly GDP since modern records began in 1987 were better than anticipated.
Stats NZ accounts on Thursday showed the economy contracting 12.2 percent in the June quarter.
“This result was better than the Treasury’s forecast of 16% published [on Wednesday] and at the lower end of the expectations of other commenters, ”said Robertson.
Since Covid-19 began to shake the New Zealand economy, forecasters have steadily lowered their forecasts on how severe the economic effects of the crisis would be.
In May, the Treasury feared that the economy would contract 23.5% this quarter. On Wednesday, he revised that forecast to 16 percent.
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ROBERT KITCHEN / Things
Grant Robertson says that GDP shows the worst of the lockdown, but not some positive signs afterward.
While the figure was much better than feared, it was by far the worst quarterly contraction in New Zealand’s recorded history, according to Stats NZ.
“The 12.2 percent drop in quarterly GDP is by far the largest on record in New Zealand,” said Paul Pascoe, senior manager of national accounts at Stats NZ.
The next worst quarter was a 2.4% decline recorded in March 1991.
Robertson said that the GDP statistics captured the worst of the lockdown, but missed some of the more positive data that emerged later.
“The June quarter includes almost the entire time New Zealand was at Alert Level 4, which we passed on March 26, so this result is not surprising. Going hard and early means we can come back faster and stronger. Economists expect the current September quarter to show a record jump towards growth in the economy, ”he said.
“We already know that we have recovered since the end of June, with New Zealand’s activity index in July up 2 percent from the same period last year. Spending on electronic cards was also 11% higher in July than in the same period in 2019. ”
National Party leader Judith Collins and finance spokesperson Paul Goldsmith said the economic pain was worse than necessary.
“The lack of pragmatism and a clear plan from the Labor Party has made the economic hole deeper and the impact harder than necessary,” Goldsmith said.
“This economic damage was registered in three months, but it will last the next decades.
“This is the deepest recession in living memory. It is already having a devastating impact on Kiwi families. ”
Robertson said a big reason New Zealand’s contraction was so great was the relative importance of sectors like tourism and international education to the economy.
“The contribution of a sector like tourism to New Zealand’s exports is roughly double that of the Australian economy, which contracted 7 percent in the same quarter,” said Robertson.
But Collins said the contraction was due to the fact that the government did not heed the economic advice.
“Ultimately, you have to be absolutely focused on the economy,” Collins said.
“It is very obvious that some of the decisions that are being made at this time do not depend on the health councils.”
Collins said he would have done things differently.
“We can say that we would not have stopped the construction industry, we would not have stopped work on the roads, we would not have stopped people from building houses,” he said.
Goldsmith acknowledged that economies around the world were experiencing contractions, but did not say how much he thought a national government could have reduced the economic damage.
“All you can do is do the best you can as a government,” Goldsmith said.
ACT leader David Seymour said the figures showed that the government had taken an unbalanced approach to Covid-19.
“You’ve been too busy lecturing New Zealanders from the podium and spending money on dubious projects when you should have been asking: what economic activity can we safely allow?” he said.
Seymour said parties should show restraint with spending.
“We should ask ourselves what can be done, instead of dictating from the podium what cannot be done,” he said.
He said he was concerned that Australia’s relatively better performance meant there could be a brain drain when the borders were reopened.
