WELLINGTON, New Zealand – New Zealand’s economy suffered its biggest contraction in 29 years during the first 3 months of the year, official data showed on Thursday, June 18, with worse expected as the coronavirus pandemic‘s full impact emerges.
Gross domestic product (GDP) shrank 1.6% in the January-March quarter, the biggest fall since early 1991.
The contraction exceeded market expectations of about 1%, even though the quarter only covers the early stages of the coronavirus crisis.
New Zealand entered a strict 7-week lockdown on March 24.
“This quarter’s GDP results showed a widespread drop in economic activity as travel restrictions took hold and the country moved towards lockdown,” Statistics New Zealand said.
“COVID-19 effects came on top of the smaller impact from drought in some parts of the country. The 1.6% fall surpassed quarterly falls during the global financial crisis in the late 2000s.”
Westpac Bank predicts GDP will plummet by up to 13.8% in the April-June period, providing a 2nd quarter of negative growth that would officially tip New Zealand into recession.
The quarterly figure took annual GDP growth for the year to March 31 to 1.5%, compared with 3.1% for the same period a year earlier.
New Zealand’s center-left coalition government took what it termed a “go early, go hard” approach to the pandemic, sealing borders and imposing a strict lockdown to contain the virus.