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WELLINGTON: New Zealand rebounded from a coronavirus-induced recession with record economic growth of 14 percent in the July-September quarter, official data showed on Thursday (December 17).
The strong numbers followed an 11 percent decline in the previous quarter, when New Zealand was in a COVID-19 lockdown.
Finance Minister Grant Robertson said the recovery was a reward for New Zealand’s success in containing the virus, with just 25 deaths among a population of five million.
“The economic rebound is the result of our decision to act tough and early during the COVID-19 pandemic,” he said.
“We support more than 1.8 million workers through the Salary Subsidy Plan and we invest billions of dollars in infrastructure, training and job creation.”
Consumer spending and construction fueled growth after a period of forced hibernation during the lockdown.
Statistics New Zealand said the retail, lodging and restaurant sectors were up 42.8 percent, as Kiwis enjoyed a near-normal domestic existence, while construction increased 52.4 percent.
“This resulted in the highest quarterly GDP growth on record in New Zealand,” SNZ Senior Manager Paul Pascoe said.
Despite the stellar quarterly performance, data showed that the New Zealand economy contracted 2.2% year-on-year.
“Although activity across the country largely returned to pre-COVID-19 levels, we have not recovered all of the activity or production lost as a result of the shutdown,” Pascoe said.
V-SHAPED RECOVERY
New Zealand has been widely praised for its response to COVID-19, which involved a strict lockdown to suppress community transmission, followed by extensive testing and contact tracing to deal with any subsequent outbreaks.
The country has registered a total of 1,744 coronavirus cases, with the 43 currently active cases detected at the border.
The border remains closed, and all international arrivals must undergo a two-week quarantine.
Kiwibank chief economist Jarrod Kerr said that means sectors that depend on international travel, such as tourism and education, continue to struggle.
The wildly fluctuating quarterly numbers were roughly in line with market expectations, but Kerr said they were still hard to digest.
“This is the closest thing to a true V-shaped recovery,” he said.
“It is clear that 95 percent of our economy is doing particularly well, but we have to think about the other five percent.”
Prime Minister Jacinda Ardern announced plans this week to open a travel bubble with Australia in the first quarter of 2021, which Kerr says would help the tourism industry.
READ: New Zealand creates its first ‘travel bubble’ with the Cook Islands
The brief recession, which covered the first and second quarters of this year, was New Zealand’s first in a decade, following continued growth since 2010.
Robertson said there was no room for complacency as the economy had not yet returned to pre-coronavirus levels and growth could be spotty for some time due to the pandemic.
“The full economic effects of COVID-19 are still being felt in New Zealand and around the world,” he said.
