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WELLINGTON: New Zealand fell into recession for the first time in a decade on Thursday (September 17), when data confirmed a record economic collapse that forced Prime Minister Jacinda Ardern to defend her response to the pandemic ahead of the US general elections. next month.
The 12.2 percent contraction in April-June was “by far the largest” since records began, the national data agency Stats NZ said, with the country under a strict lockdown for nearly two months and the country’s borders country closed.
Ardern rejected the opposition’s allegations that the tough measures had pushed the economy “off a cliff”, saying the restrictions helped contain the virus, allowing business to resume much earlier than in many other countries.
The center-left leader, who will go for re-election from the polls on October 17, also noted that New Zealand had recorded only 25 deaths from COVID-19, out of a population of five million.
“For me, success is saving people’s lives, supporting and saving people’s businesses, getting out of the other side (of the crisis) faster, faster and with more activity,” he told reporters.
“I support our results.”
She said the economic pain from the lockdown in the June quarter would be followed by a rebound in July-September, when virus-related restrictions were significantly eased.
Ardern maintains a strong lead in opinion polls and is expected to keep the job, despite dismal pre-election economic figures.
Finance Minister Grant Robertson said it could have been much worse, as May budget documents forecast a 23.5 quarterly drop and the Treasury forecast a 16 percent drop this week.
“There is no way that any political party can claim that there would not have been a recession in New Zealand during this period,” he said.
“This is a global economic shock of one in 100 years.”
READ: Crowds gather in New Zealand’s Auckland against COVID-19 lockdown
Stats NZ spokesman Paul Pascoe said that the closure of New Zealand’s borders since March 19 had also had a major impact on some sectors of the economy.
“Industries such as retail, lodging and restaurants, and transportation experienced significant drops in production because they were the most directly affected by the international travel ban and the strict national lockdown,” he said.
“Other industries, such as food and beverage manufacturing, were essential services and fell much less.”
The second-quarter decline follows a 1.6% contraction in the first three months of 2020, confirming widespread expectations that New Zealand is in recession.
However, the 12.2 percent figure was below the 16 percent predicted by the government this week and well below the 23.5 percent predicted in last May’s budget.
READ: New Zealand to lift coronavirus restrictions in most of the country on September 21
“THIS WAS TRAUMATIC”
New Zealand has recorded just 25 coronavirus deaths out of a population of five million and the cases have been largely contained since late May, aside from an outbreak in Auckland last month.
The opposition National Party said the figures showed a change of government was needed because the Ardern administration was unable to adequately handle the economy or the response to the pandemic.
“It is now official that we are in the deepest recession in living memory and it is proof that New Zealand needs a nationally led government now that it has a very clear plan,” said national leader Judith Collins.
He said New Zealand “compares very unfavorably” with neighboring Australia, which posted a seven percent economic contraction in the June quarter after taking a looser approach to closures and border controls.
New Zealand’s most recent recession was in 2008-09 and up to the first three months of this year it had seen uninterrupted quarterly growth since 2010.
Kiwibank chief economist Jarrod Kerr said the magnitude of the June quarter decline was unprecedented.
“We had never seen anything like this. It was traumatic,” he said.
“Exports of services were blocked, and they were down 40 percent in the quarter, consumption was down 12 percent and investment was down 20 percent.”
But he said the figure was unique and that it would be followed by a 10 percent growth increase in the September quarter, which would also be a record.
“Businesses and households have clearly adapted to trade in a world with limited face-to-face contracts,” he said.
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