New Zealand’s economy plunges into recession

AUCKLAND: New Zealand plunged into recession for the first time in a decade as data released on Thursday confirmed a record-breaking economic collapse.

The 12.2 percent contraction in April-June is by far the largest since records began, said the national data agency Stats NZ. Prime Minister Jacinda Ardern was forced to defend her pandemic response ahead of next month’s general election with the country under a strict lockdown for almost two months and borders closed.

Ardern rejected opposition accusations that the tough measures had pushed the economy “off a cliff”, saying the restrictions helped contain the virus. She also pointed out that New Zealand had recorded just 25 Covid-19 deaths out of a population of five million.

She said the economic pain of lockdown in the June quarter would be followed by a rebound in July-September when virus-related restrictions were eased significantly. Ardern retains a strong lead in opinion polls and is expected to retain office in the election on 17th October, despite the dismal pre-election economic figures.

Finance Minister Grant Robertson said it could have been much worse, with budget papers in May predicting a 23.5 quarterly decline and Treasury forecasting a 16 percent drop just this week.

The opposition National Party said the figures showed a change of government was needed because Ardern’s administration could not properly manage the economy or the pandemic response.

National leader Judith Collins said New Zealand compared unfavourably with neighbouring Australia which recorded an economic contraction of seven percent in the June quarter after adopting a more flexible approach to lockdowns and border controls.

New Zealand’s most recent recession was in 2008-09 and until the first three months of this year it had recorded non-stop quarterly growth since 2010. The second-quarter decline follows a 1.6-percent contraction in the first three months of 2020, confirming widespread expectations that New Zealand is in recession.