The Indian Weekender, Friday 18 September 2020

The Indian Weekender Friday, September 18, 2020
NEW ZEALAND 5
Covid-19: GDP results show NZ
officially in first recession in a decade
RADIO NEW ZEALAND
The economy has shrunk by
a record amount and fell
into its first recession in
a decade as it was battered by the
government’s moves to eliminate
Covid-19, but it will already be on
the road to recovery.
Official numbers show gross
domestic product (GDP) fell a
seasonally adjusted 12.2 percent for
the three months to June.
It followed a revised 1.4 percent
fall in the first quarter and was the
biggest fall since the current system
of measuring data was introduced in
1987.
“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 nation-wide
lockdown,” Stats NZ senior manager
Paul Pascoe said.
The consensus of forecasts was for
a fall of between 12-13 percent, but
the Reserve Bank forecast more than
14 percent and Treasury 16 percent.
Service industries fell by 10.9
percent, with consumer spending
falling more than 25 percent, but
there were double digit falls for
manufacturing, and construction.
The economy shrank by 12.4
percent on the same quarter a year
ago, while the annual average growth
rate fell to 2 percent. Finance Minister
Grant Robertson said the sharp
economic decline was no surprise,
but the government’s measures such
as the wage subsidy, business loans,
and other schemes had cushioned the
impact and laid the foundation for
the rebound.
“Going hard and early means
that we can come back faster and
stronger. Economists expect the
current September quarter to show
a record jump back to growth in the
economy.” Opposition parties were
quick to jump on the numbers as an
example of government failure.
“The lack of pragmatism and a
clear plan from Labour has made
the economic hole deeper and the
impact harder than it needed to be,”
National finance spokesperson Paul
Goldsmith said.
ACT leader David Seymour said
the government had allowed the
economy to fall off a cliff and created
a mountain of debt. But economists
had already moved on from the data,
which many regarded as ‘ancient
history’.
“There is little point getting hung
up on Q2 numbers. There is likely
to be major revisions to the numbers
by StatsNZ as new information
comes to hand,” said Kiwibank chief
economist Jarrod Kerr.
“Activity that was halted during
the lockdown, particularly across
traditional services, was not
necessarily cancelled activity but
rather deferred.”
Kerr said the downturn was the
one “we had to have” and it has
offered a range of opportunities to
transform the economy and set it
on a different growth path, but this
would mean it would need to keep
spending and investing. Economists
are forecasting a rebound of as much
as 10 percent in the current quarter to
the end of September, which would
be the end of the recession.
But uncertainties surrounding
Covid-19 and border closure look
set to keep business investment
and household spending subdued,
meaning the actual hit to the economy
will persist for much longer.
New Zealand’s growth slump was
worse than Australia’s 7 percent
and the US 9.1 percent fall, but was
close to contractions in Canada and
most of Europe, and much better
than the UK’s 20.4 percent decline.
Financial markets were unmoved by
the numbers.
Authorised by G Hamilton, 41 Pipitea Street, Wellington.
Strong Team.
More Jobs.
Better Economy.