New Zealand GDP figures compare favourably to other countries

New Zealand suffered a sizeable drop in gross domestic product (GDP) in the December quarter, but our economic activity over the last year compares favourably to what other countries have experienced.

StatsNZ revealed on Thursday that Aotearoa's GDP dropped 1 percent in the last three months of 2020. That was a larger shift than expected, with some banks predicting GDP could jump over the quarter.

The plunge is being put down to an easing of economic activity after last year's post-lockdown bounce as well as the continued absence of international visitors due to COVID-19 border closures. The construction industry also remained weak, dropping 8.7 percent. 

There was a -0.9 percent change from the same quarter in the previous year, which is better than what many of our overseas partners have seen.

For example, Australia was down 1.1 percent, the United States dropped 2.4 percent, Canada fell 3.2 percent and the United Kingdom saw a massive slump of 7.8 percent. 

New Zealand GDP figures compare favourably to other countries

Our quarterly results don't stand up quite as well, but they follow a record 14 percent growth in the September quarter, a bounce-back many other countries didn't experience. For example, Australia's growth in quarter three was 3.4 percent. 

As StatsNZ says, "countries around the world have had varying experiences of, and responses to, the COVID-19 pandemic" as well as "structural differences in their economies".

Reacting to the new GDP figures on Thursday morning, Finance Minister Grant Robertson said the Kiwi economy was remaining resilient and was still among the best in the world. 

"It is not surprising that these numbers are jumping around. The world is dealing with the ongoing impact of COVID-19 and there will be volatility for some time," Robertson said.

"New Zealand had an extremely strong bounce-back in the September quarter and some of that has evened out in the December quarter.

"We outperformed the countries we compare ourselves to on this measure."

ASB said  fall "raises questions around the true extent of NZ's economic performance through the pandemic". 

"The absence of foreign tourists is having a greater negative impact on GDP than previously estimated, compounded by the possibility of capacity constraints holding back the stronger parts of the economy (i.e. construction).  The implications are mixed, as some sectors are constrained by weak demand but others may be constrained by supply."