NZ in recession as economy shrinks 12% in April-June

WELLINGTON: New Zealand plunged into recession for the first time in a decade yesterday, as data confirmed a record-breaking economic collapse that forced Prime Minister Jacinda Ardern to defend her pandemic response ahead of next month’s general election.

The 12.2% contraction in April-June was “by far the largest” since records began, national data agency Stats NZ said, with the country put into a strict lockdown for almost two months and the country’s borders closed.

Ardern rejected opposition accusations that the tough measures had pushed the economy “off a cliff”, saying the restrictions helped contain the virus, which allowed business to resume far earlier than in many other countries.

The centre-left leader, who will go to the polls re-election on Oct 17, also pointed out that New Zealand had recorded just 25 Covid19 deaths, out of a population of five million.

“Success for me is saving people’s lives, supporting and saving people’s businesses, coming out the other side (of the crisis) faster, quicker and with more activity,“she told reporters.

“I back our results.”

She said the economic pain of lockdown in the June quarter would be followed by a rebound in July-September, when virus-related restrictions were eased significantly.

Ardern retains a strong lead in opinion polls and is expected to retain office, despite the ugly pre-election economic figures.

Finance Minister Grant Robertson said it could have been much worse, with budget papers in May predicting a 23.5 quarterly decline and Treasury forecasting a 16% drop just this week.

“There is no way that any political party could claim that there would not have been a recession in New Zealand during this period,“he said.

“This is a one-in-100-year global economic shock.”

New Zealand’s most recent recession was in 2008-09 and until the first three months of this year it had recorded non-stop quarterly growth since 2010.

The second-quarter decline follows a 1.6% contraction in the first three months of 2020, confirming widespread expectations that New Zealand is in recession. – AFP