GDP falls 0.2 percent, demonstrating Omicron's blow to economy

New Zealand's Gross Domestic Product (GDP) fell 0.2 percent in the first quarter of 2022, the latest data shows.

The new GPD figures released on Thursday captured the peak of New Zealand's COVID-19 Omicron outbreak. The fall follows a 3 percent rise in the December 2021 quarter.

Compared to the March 2021 quarter GDP, which measures national output growth, this year's March quarter was up 5.1 percent. 

Statistics NZ said border restrictions meant there was little travel in the March quarter and the change in economic activity came amid several months marked by the community spread of Omicron.

Primary industries was the biggest contributor to the March 2022 decline. Its GDP fell 1.2 percent due to lower outputs in food, agriculture, forestry and fishing industries, Stats NZ national accounts industry and production senior manager Ruvani Ratnayake said.

GDP across service industries, representing about two-thirds of New Zealand's economy, remained flat. Across goods-producing industries, GDP fell 0.1 percent - with falls in manufacturing being the largest contributor.

"These declines corresponded to falls in related exports categories, including dairy products; meat products; agriculture and fishing products; and other food, beverage and tobacco products," Ratnayake said.

After a 2.6 percent rise in the December quarter, construction activity was up 1.7 percent. Residential building construction was a strong contributor to this growth.

"The rise in construction was mirrored in investment in fixed assets, with growth in investment in residential and non-residential building," Stats NZ said.

Ahead of the figures being released, ASB senior economist Chris Tennent-Brown said the economy was still performing "reasonably well" despite the cost of living crisis.

"We've got a very low unemployment rate, we've got positive economic growth, we've got strong export prices and GDP captures some of that.

"I constantly remind people that the economy's actually going reasonably well, despite some of the doom and gloom that we read about," he told AM earlier on Thursday.

Going forward, banks were forecasting GDP data to settle in the second half of 2021.

But ANZ said a slip in economic strength was increasingly likely and "we need to continue to look beyond GDP for our steer on economic momentum".