A report on New Zealand’s Gross Domestic Product (GDP) revealed on Thursday that the nation has slipped into its first recession in ten years, thanks to economic damage from the Wuhan coronavirus.
Radio New Zealand (RNZ) reported the GDP dropped a seasonally adjusted 12.2 percent over the quarter ending in June, following a 1.4 percent drop in the first quarter. The second-quarter figure represented “the biggest fall since the current system of measuring data was introduced in 1987.”
The decline was especially acute in the retail, restaurant, hotel, and transportation industries due to travel bans and New Zealand’s strict lockdown policy. Consumer spending was down by over 25 percent, while manufacturing and construction saw double-digit declines. New Zealand is exceptionally reliant upon the very industries that suffered most during the pandemic.
As bad as the second-quarter report was, it might have been even worse, as New Zealand’s Treasury predicted a decline of up to 16 percent.
“Going hard and early means that we can come back faster and stronger. Economists expect the current September quarter to show a record jump back to growth in the economy,” Finance Minister Grant Robertson said after the numbers were announced, referring to the costs of New Zealand’s lockdown.
“While the economy slowed during lockdown, the benefits of moving into alert level 4 are not taken into account — including potentially saving thousands of lives, not overburdening the health system and getting on top of the virus so we could bounce back faster,” Robertson contended.
“The lack of pragmatism and a clear plan from Labour has made the economic hole deeper and the impact harder than it needed to be,” countered Paul Goldsmith, finance spokesperson for the opposition National Party.
The BBC anticipated economic issues will be front and center during next month’s election, delayed from August after a spike in coronavirus cases.
Prime Minister Jacinda Ardern said she expected a major “rebound” in the coming months and argued New Zealand is “in a much better position” than Australia. On the other hand, the BBC cited forecasts that continuing coronavirus-related disruptions and massive government debt could delay full recovery.
One of those disruptions involves a proposal to create a “travel bubble” between New Zealand and Australia. The UK Guardian noted this arrangement “now looks unlikely to happen before Christmas following community outbreaks in both countries.”
The Sydney Morning Herald (SMH) put New Zealand’s numbers in context by noting that “Australia and the United States have fared better than most with declines of 7 percent and 9.1 percent, respectively, while the average drop so far in Europe is 12.4 percent.” Britain, it added, is coping with the “horror” of a 20.4 percent decline.
Ardern was saluted as one of the world’s top leaders by the Democrat candidates during their second primary debate, with Pete Buttigieg calling her “masterful” and, at age 39, an inspirational example of what younger leaders like himself could accomplish. Marianne Williamson named Ardern as the first person she would call for advice on how to manage affairs in the United States.