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The New Zealand economy recovered strongly from the recession in the third quarter, achieving the so-called V-shaped recovery, as massive fiscal and monetary stimulus boosted consumer spending.
Gross domestic product rose 14% from the second quarter, when it contracted a revised 11%, Statistics New Zealand said in Wellington on Thursday. Economists forecast a 12.9% increase. Compared to the previous year, the economy grew 0.4%, confounding the consensus forecast of a 1.8% drop.
New Zealanders have spent a lot since the nation eliminated community transmission of Covid-19 in May and then successfully contained sporadic outbreaks. However, the border remains closed to foreigners, paralyzing the tourism industry, and many companies have suspended their investment and hiring plans, which is projected to increase the unemployment rate in 2021.
The V-shaped economic rebound is “vindication of the Covid-19 ‘elimination’ strategy that New Zealand has followed as it has underpinned a strong economic recovery from what has been an unprecedented shock,” said Paul Bloxham. , Chief Economist for Australia and New Zealand. at HSBC in Sydney. Still, “international borders closed to the movement of people are affecting tourism and exports of other services, and it is expected that they will continue to do so for some time.”
The New Zealand dollar rose after the GDP report and bought 71.29 cents at 3:52 pm in Wellington. The coin has gained 5.5% in the past three months and was appreciating before launch after Prime Minister Jacinda Ardern announced plans to offer Covid-19 vaccines to the entire population in the second half of 2021.
The rapid rebound of the economy to pre-Covid levels was a rare feat, said Stephen Toplis, head of research at Bank of New Zealand in Wellington.
“We can only identify three other countries that have achieved ‘full recovery’: Taiwan, China and Ireland,” he said. “New Zealand is definitely a very small minority.”
The government’s determination to eliminate the virus caused it to impose one of the strictest lockdowns in the world, but allowed for a more rapid resumption of economic activity once it was removed. New Zealand has recorded 1,744 confirmed cases of Covid-19 and only 25 deaths.
Customers sit outside a bar and restaurant in Wellington, New Zealand, on December 15.
Photographer: Birgit Krippner / Bloomberg
A new outbreak in the community in mid-August required a second six-week shutdown in Auckland’s largest city, but the country has fared better than many of its peers. The UK’s GDP fell 9.6% in the third quarter from a year earlier, while Australia’s fell 3.8%.
The government pledged NZ $ 62 billion ($ 44 billion) of fiscal support to help revive domestic demand and protect jobs, while the central bank cut interest rates and embarked on easing programs. quantitative and term loans to further reduce borrowing costs.
That put a rocket under the housing market, with prices soaring to new records.
The government signals discomfort with the housing tool requested by RBNZ
Still, the Reserve Bank and some economists have warned that the economy could contract in the fourth quarter and even face a double dip recession early next year, citing slower global growth and the possibility of the border remaining. closed for most visitors until at least the second half of 2021.
Other details
The third-quarter expansion was driven by the construction and service industries, particularly retail, lodging and restaurants, the statistics agency said.
- Manufacturing production increased 17% from the second quarter
- Construction jumped 52%
- Household consumption increased 14.8% led by cars, televisions and domestic air travel
- Investment increased 27% led by residential construction
- Exports increased 4.9%, while imports increased 10.6%
- GDP per capita rose 13.8%
(Updates with economist comment in fourth paragraph)
