New Zealand is in its deepest recession in decades, following tough measures in response to the Covid-1
The country’s GDP shrank by 12.2% between April and June as blockades and border closures hit.
This is the first recession in New Zealand since the global financial crisis and the worst since 1987, when the current measurement system began.
But the government hopes his pandemic response will lead to a speedy recovery.
The country of nearly five million was briefly declared virus-free, and although there are still a few cases, it had only 25 deaths.
The economy is likely to be a key issue in next month’s election, which was delayed after an unexpected jump in the Covid-19 case in August.
NZ statistics 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, as well as transport, have seen significant declines in production, as they have been most directly affected by the international travel ban and strict blockades across the country,” he said.
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Prime Minister Jacinda Ardern’s government says success in suppressing the virus is likely to help prospects for recovery.
Finance Minister Grant Robertson said GDP figures were better than expected and suggested a strong recovery ahead.
“If we go hard and early, it means we can come back faster and stronger,” he said.
Some economists also predict a speedy recovery due to New Zealand’s strong response to the virus.
“We expect the record decline in GDP in June to be followed by a record rise in September,” said Michael Gordon, a senior economist at Westpac.
The Treasury Department’s forecasts released yesterday suggest a huge debt, and ongoing disruptions are likely to delay a full recovery.
The opposition National Party accused the government of lacking pragmatism, which made the impact worse than it should have been.
New Zealand saw a steeper decline than neighboring Australia, where the blockade was less severe.
But the state of Victoria is facing a second blockade, which is likely to weigh on Australia’s economic recovery.