New Zealand a step closer to recession as GDP suffers biggest fall in 29 years By Tracy Withers, 6/18/20
New Zealand's GDP suffered its biggest fall since 1991 as the pandemic began to bite in the 1st qtr.
GDP fell 1.6% from the 4th qtr, Stats Nz said on Thurs in Wellington. Economists expected GDP would shrink 1%. From a year earlier, the economy fell 0.2% - the 1st annual contraction since 2009.
The nation is bracing for a severe contraction in the three months through June after it responded to the pandemic by closing its border and imposing a strict nationwide lockdown that stayed in place until mid-May. The government has pledged $NZ62 billion ($58.1 billion) of fiscal support to help revive domestic demand and protect jobs, while the central bank has slashed interest rates and embarked on quantitative easing to drive down borrowing costs.
The NZ dollar declined after the GDP report. It bought 64.59 U.S. cents at 8.50 am AEST in Wellington.
The impact from the COVID-19 outbreak began to be felt in early Feb with a travel ban imposed on arrivals from China & exporters facing difficulties in their supply chains. Tourism started to feel the pain as border measures were stepped up after the first case of COVID-19 was discovered on Feb 28. PM Jacinda Ardern eventually took the unprecedented step of closing the border to all foreigners on March 19.
Only in the final week of the quarter, on March 25, was the nation placed into lockdown, requiring almost all retailers other than supermarkets to close and shutting down building sites and most factories.
Bank economists predict the economy will contract by as much as 19% in the 2nd qtr, confirming NZ's 1st recession since the 2nd half of 2010. Some have scaled back the severity of the expected slump after the country succeeded in eliminating the virus & came out of lockdown earlier than anticipated, partially reviving consumer confidence & giving a fillip to retail spending.