New Zealand is in its deepest recession in decades after tough measures in response to the Covid-19 pandemic, which was widely praised.
It is New Zealand’s first recession since the global financial crisis and the worst since 1987, when the current measurement system began.
But the government hopes its pandemic response will lead to a rapid recovery.
The nation of nearly five million was briefly declared virus-free, and although it still has a handful of cases, it has had only 25 deaths.
The economy is likely to be a key issue in next month’s election, which was delayed following an unexpected rise in Covid-19 cases in August.
State NZ spokesman Paul Pascoe said the measures implemented since March 19 have had a huge impact on some sectors of the economy.
“Industries such as retail, accommodation and restaurants and transport experienced significant production declines because they were most directly affected by the international travel ban and strict nationwide lockdown,” he said.
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Prime Minister Jacinda Arden’s government has said that the success of suppressing the virus is likely to help the prospects for recovery.
Finance Minister Grant Robertson said GDP figures were better than expected and suggested a strong recovery going forward.
“Going hard and early means we can come back faster and stronger,” he said.
Some economists also predict a rapid recovery due to New Zealand’s strong response to the virus.
“We expect the June quarter’s record GDP decline to be followed by a record rise in the September quarter,” said Westpac Senior Economist Michael Gordon.
But Treasury forecasts released yesterday indicated massive debt, and continued disruption is likely to delay a full recovery.
The National Opposition Party accused the government of a lack of pragmatism that made the impact worse than it needed.
New Zealand recorded a steeper decline than neighboring Australia, where the shutdown was less severe.
But the state of Victoria has faced another downturn that is likely to outweigh Australia’s economic recovery.