New Zealand inches towards recession after nearly 10 yrs

New Zealand recorded a 1.6 per cent drop in its GDP in the first quarter of 2020 amid the impact of the COVID-19 crisis, and was heading towards recession after nearly a decade of economic growth.

New Zealand’s statistics office on Thursday reported the quarterly decline, the biggest drop since a 2.4 per cent decline recorded in March 1991, which coincided with the implementation of a travel ban and lockdown in the country, reports Efe news.

“GDP fell 1.6 per cent in the March 2020 quarter, the largest drop in 29 years, as the initial effects of COVID-19 restrictions impacted on economic activity,” Stats NZ said in a statement.

“This quarter’s GDP results showed a widespread drop in economic activity as travel restrictions took hold and the country moved towards lockdown. COVID-19 effects came on top of the smaller impact from drought in some parts of the country,” it added.

If a further drop in the second quarter, between April and June, which were the toughest months of the epidemic in New Zealand, is confirmed, the country will officially enter recession.

“The biggest impact of the global recession and Alert Level 4 public health restrictions will be seen in the current June quarter,” Finance Minister Grant Robertson said in a statement.

He added that the figure was in line with economist predictions and assured that annual average GDP was up 1.5 per cent from a year ago.

“We’ve always acknowledged that the global COVID-19 pandemic, and the measures put in place to protect New Zealanders will impact the March and June quarter GDP data.

“These measures have allowed us to get back to Level 1 more quickly than expected, and operate at levels that other countries aren’t able to,” Robertson said.

New Zealand has received international praise for its early and effective response to the pandemic at a time when it had reported only 50 cases.

The country has so far recorded 1,157 confirmed cases with 22 deaths.

Three news cases were reported this week, the latest on Thursday, for the first time in 24 days.