New Zealand’s gross domestic product (GDP) has suffered its largest fall on record as the economic impact of Covid-19 hit, the government’s official data agency reported on Thursday.
The country’s GDP fell 12.2 per cent in the three months ended June 30, the largest fall since comparable records began in 1987, Stats New Zealand said.
Senior manager Paul Pascoe said the results showed a widespread drop in economic activity due to Covid-19 restrictions.
New Zealand started the quarter in a strict lockdown, where all non-essential businesses were closed, which left many parts of the economy unable to operate normally.
By June 8, the country had relaxed most restrictions, although the border remains closed to most people.
The fall was better than the Treasury forecast of 16 per cent and reflected the decision to protect New Zealanders from the pandemic, finance minister Grant Robertson said in a statement.
“The lives and livelihoods of New Zealander’s are our top priority. The government acted swiftly to put the country into lockdown and protect our people when Covid-19 arrived,” he said.
“Going hard and early means that we can come back faster and stronger.” Roberston said there were limitations of using GDP as a measure of the well-being of a country.
“While the economy slowed during lockdown, the benefits of moving into Alert Level Four [strict lockdown] 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 said.
The structure of the economy, which relies heavily on tourism and international education, meant the fall was in line with expectations, he said.
The contribution of a sector like tourism to New Zealand’s exports is about double that which the tourism sector makes to the Australian economy which contracted 7 per cent in the same quarter, Robertson said.
Measures to contain Covid-19 had led to “historically large falls” in GDP in many parts of the world, with countries’ results reflecting the nature and timing of their responses, and the structure of their economies, Stats New Zealand said.
New Zealand’s result compares to falls of 11.5 per cent in Canada, 7.9 per cent in Japan, 20.4 per cent in the United Kingdom, and 9.1 per cent in the United States, Stats New Zealand said.
In New Zealand, some industries were more affected than others, Pascoe said. “Industries like retail, accommodation and restaurants, and transport saw significant declines in production because they were most directly affected by the international travel ban and strict nationwide lockdown,” Pascoe said.
“Other industries, like food and beverage manufacturing, were essential services and fell much less.”
On an annual basis, GDP declined 2.0 per cent over the year ended June , 2020, according to the national statistics office.