COVID-19: New Zealand records largest GDP plummet in 29 years

New Zealand's Gross Domestic Product (GDP) plummeted 1.6 percent in the March quarter, Stats NZ said on Thursday, in what is the largest decline in 29 years.

"The 1.6 percent fall surpassed quarterly falls during the global financial crisis in the late 2000s," Stats NZ national accounts senior manager Paul Pascoe said.

Hospitality alone was down 7.8 percent, much of it down to border closures.

"Industries related to international travel, such as accommodation and transport, began to feel the effects of COVID-19 earlier in the quarter, with activity dropping significantly once the borders closed on March 19," Pascoe said.

There were also falls in the construction (4.1 percent) and transport, postal, and warehousing industries (5.2 percent).

Household consumption expenditure fell 0.3 percent over the quarter.

While New Zealand's economic activity dropped 1.6 percent in the quarter, it was less of a decline than Canada (2.1 percent) and the UK (2.0 percent).

Statistics NZ said Australia's economic activity fell 0.3 percent while there was a 1.3 percent decline in the US. New Zealand, however, implemented a stricter lockdown to curb the spread of COVID-19.

The US is the COVID-19 epicentre as infections continue to hit record highs in some states and while Australia has been largely successful in containing the disease, it's stil grappling with small outbreaks.

"Annual GDP growth for the year ended March 2020 dropped to 1.5 percent, compared with a 3.1 percent growth in the year ended March 2019," Stats NZ said.

National Party leader Todd Muller said the figures confirmed the Opposition's "worst fears".

"Every family and community in New Zealand is going to be hit worse than almost anyone alive today can remember."

Todd Muller.
Todd Muller. Photo credit: Getty

Shortly before the figures were released on Thursday morning, Finance Minister Grant Robertson told Magic Talk's Peter Williams the numbers would be significant in understanding the early stage economic impact of COVID-19.

"We all know that we've now moved into another period where there are significant impacts but we're doing our best to cushion the blow.

 "Every market commentator has got a range of predictions and they do range from the very low negatives to higher up towards one [or] two percent.

"I think anyone who's been watching the economy would know that those industries like forestry, seafood [and] international education had already started to experience the downturn in the first quarter."

 

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