New Zealand faces worst recession in decades

Daily US Times New Zealand faces worst recession in decades
Between April and June as the lockdown and border closures hit, the country's GDP shrank by 12.2%. Source: Getty Images
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Daily US Times: New Zealand is facing its deepest recession in decades, following strict measures in response to the coronavirus pandemic which were widely praised.

Between April and June as the lockdown and border closures hit, the country’s GDP shrank by 12.2%.

It is New Zealand’s first recession since the global financial crisis and worst since 1987, when the current system of measurement began, but the government hopes its response to the pandemic will lead to a quick recovery.

New Zealand was briefly declared virus free, and although it still has a handful of cases, it has only had 25 deaths.

The economy the nation of nearly five million is likely to be a key issue in next month’s election, which was delayed after an unexpected spike in Covid-19 cases in August.

Stats NZ spokesman Paul Pascoe said the steps implemented since 19 March have had a huge impact of some sectors of the economy.

He 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.”

The government has said the success in suppressing the virus is likely to help recovery prospects.

Finance Minister Grant Robertson said the GDP numbers were better than expected, and he suggested a strong recovery ahead.

He said: “Going hard and early means that we can come back faster and stronger.”

Some economists are also predicting a swift recovery, because of Prime Minister Jacinda Ardern’s government’s strong response to the virus.

Westpac Senior Economist Michael Gordon said: “We expect the June quarter’s record-breaking GDP decline to be followed by a record-breaking rise in the September quarter.”

But Treasury forecasts released yesterday suggested continuing disruptions and massive debt are likely to delay full recovery.

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