New Zealand fell into its deepest economic slump on record in the second quarter of 2020 as its battle against the coronavirus pandemic paralyzed business activitiesy, official data showed on Thursday.
Gross domestic product contracted a seasonally adjusted 12.2 percent quarter-on-quarter, its sharpest quarterly contraction on record and largely in line with forecasts of a 12.8 percent decline from economists polled by Reuters. GDP fell 12.4 percent year-on-year.
The Reserve Bank of New Zealand had forecast a quarterly and annual GDP decline of 14 percent in its August statement.
Growth has been hit by a standstill in economic activitiesy as a strict nationwide coronavirus lockdown in April and parts of May forced almost everyone to stay at home and businesses to shut.
The GDP data confirms New Zealand's worst recession, defined as two straight quarters of contraction, since 2010, with GDP in the March quarter falling 1.6 percent.
In comparison, second quarter economic growth in neighboring Australia which enforced a less stringent COVID-19 lockdown fell 7.0 percent, while the United States recorded a 9.1 percent drop.
But economists say New Zealand will bounce back faster, while other nations are still struggling to contain the coronavirus.
"We expect the June quarter's record-breaking GDP decline to be followed by a record-breaking rise in the September quarter," said Westpac Senior Economist Michael Gordon.
Prime Minister Jacinda Ardern's government, which faces an election on October 17, has said success in suppressing the virus locally is likely to help recovery prospects.
Treasury forecasts released on Wednesday showed that while New Zealand's response to COVID-19 helped lessen the short-term economic shock, massive debt and continuing disruptions will delay a full recovery.
Economists say the GDP data will have little impact on the central bank's policy, which is expected to hold interest rates at a record low of 0.25 percent at its meeting on September 23.
Italian designer Cucinelli gives $38m of clothing to those in need
China develops AI model that can tell COVID-19 from flu in 3 seconds
Laos has every reason to work with China
Djokovic to face Nadal in French Open final blockbuster
Residents embrace National Day after beating COVID-19
Daily Crunch: Zoom launches its events marketplace