COVID-19 sees record 12.2 percent fall in New Zealand’s economy

COVID-19 sees record 12.2 percent fall in New Zealand’s economy

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Gross domestic product (GDP) fell by 12.2 percent in the June 2020 quarter, the largest quarterly fall recorded since the current series began in 1987, as the COVID-19 restrictions in place through the quarter impacted economic activity, Stats NZ said today.


“The 12.2 percent fall in quarterly GDP is by far the largest on record in New Zealand,” national accounts senior manager Paul Pascoe said.

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Measures to contain COVID-19 have led to historically large falls in GDP in many parts of the world, with countries’ results reflecting the nature and timing of their responses, and the structure of their economies. For example, New Zealand’s result compares to falls of 7.0 percent in Australia, 11.5 percent in Canada, 7.9 percent in Japan, 20.4 percent in the United Kingdom, and 9.1 percent in the United States.


New Zealand started the June 2020 quarter in alert level 4 lockdown, with strict restrictions on the activities of both households and businesses. On 8 June 2020 New Zealand reached alert level 1, which saw the removal of physical distancing requirements.


“While level 4 restrictions were in place for most of April, the gradual return to level 1 over the course of the quarter meant that businesses were able to open up again and many people returned to places of work,” Mr Pascoe said.


New Zealand’s border closed to incoming international travellers on 19 March 2020 and remained closed throughout the June 2020 quarter.


Some industries were more affected than others by the border closure and alert levels restrictions in place during the June quarter.


“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 nationwide lockdown,” Mr Pascoe said.


“Other industries, like food and beverage manufacturing, were essential services and fell much less.”


The majority of construction activity and some of the manufacturing sub industries were deemed non-essential and so temporarily shut under alert level 4. Construction declined by 25.8 percent, and manufacturing fell by 13.0 percent.


The fall in production was paralleled by declines in household spending, which fell 12.1 percent over the quarter. Expenditure on household services such as domestic and international air transport and restaurant and takeaway meals fell sharply. Exports of travel services declined, as international visitor spending fell after the border closed.


Annually, GDP fell by 2.0 percent. This is the first annual decline since the March 2010 quarter.

GDP per capita fell by 12.6 percent in the June 2020 quarter.


The speed and scale of COVID-19 response measures presented a number of measurement challenges in the June 2020 quarter. In compiling estimates of GDP, Stats NZ has used additional data and analysis to respond to areas where the standard approach has limitations. This additional work means that the impact of COVID-19 over the course of the quarter is accounted for as accurately as possible to produce reliable first estimates of GDP.


“Today’s results represent the first official estimate of overall economic activity in the June 2020 quarter” Mr Pascoe said.


“As always, we’d expect to refine and revise this initial view as more complete data becomes available. This quarter is clearly not business-as-usual and there is generally a higher level of uncertainty associated with measuring such significant changes in economic activity. We have used extra data and careful analysis to minimise this uncertainty and provide a reliable first estimate for the quarter.”


GDP estimates will be updated as more detailed but less timely information comes to hand. This is in line with standard practice in New Zealand and internationally.



More detail about Stats NZ’s approach to measurement challenges this quarter is available  in June 2020 quarter Gross domestic product and COVID-19 and June 2020 quarter Gross domestic product and COVID-19: Updated


Key travel restrictions and COVID-19 alert system timeline:


19 March 2020: New Zealand’s borders closed to almost all travellers, except for returning New Zealanders.

25 March 2020: New Zealand enters COVID-19 alert level 4

27 April 2020: New Zealand enters COVID-19 alert level 3

13 May 2020: New Zealand enters COVID-19 alert level 2

8 June 2020: New Zealand enters COVID-19 alert level 1


Oxford COVID-19 Government Response Tracker compares the timing and stringency of New Zealand’s response to those of other countries.


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