Source: New Zealand Government
Today’s better-than-forecast GDP figures show the expected impact of the decision to act quickly to protect New Zealanders from the global COVID-19 pandemic.
GDP fell 12.2% in the June quarter from March, reflecting decisions to close New Zealand’s borders and enter Alert Level 4.
“This result was better than the Treasury forecast of 16% released yesterday and at the lower end of other commentators’ expectations,” Grant Robertson said.
Annual average GDP was down 2% in the year ended June 2020.
“The lives and livelihoods of New Zealander’s are our top priority. The Government acted swiftly to put the country into lockdown and protect our people when COVID-19 arrived,” Grant Robertson said.
“The June quarter includes almost the entire time New Zealand was in Alert Level 4 which we moved into on March 26, so this result is not surprising. 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.
“We already know we have bounced back since the end of June, with the New Zealand activity index in July up two percent on the same period last year. Electronic card spending was also 11 percent higher in July than the same period in 2019.
“The structure of the New Zealand economy which relies heavily on tourism and international education means that this GDP result is in line with expectations. The contribution of a sector like tourism to New Zealand’s exports is about double than it makes to the Australian economy which contracted 7% in the same quarter.
“In some ways today’s result shows the limitations of GDP as a measure of the wellbeing of a country. While the economy slowed during lockdown, the benefits of moving into Alert Level 4 are not taken into account – including potentially saving thousands of lives, not overburdening the health system and getting on top of the virus so we could bounce back faster.
“Our investments like the wage subsidy scheme, the small business cashflow scheme and business tax changes have cushioned the blow through this health crisis, and our focus now is on supporting the economy to recover and rebuild. By opening up the economy faster than forecast, we have a strong head start,” Grant Robertson said.