New Zealand reports worst GDP in decades

New Zealand has been credited for its handling of the coronavirus pandemic. The country, of more than 5 million people, reported about 1,500 infections and less than ten deaths. It also became the first country to declare itself free of the illness.

The government achieved this by declaring a national lockdown in the first week of March. Unlike in most countries, this lockdown was strict and enforced by security forces. At the same time, it conducted large scale tests and placed people into quarantine.

All these measures helped slow the spread of the disease. It also helped push the country into its worst recession in 29 years. According to Statistics New Zealand, the country’s growth plummeted by 1.6% in the first quarter. The other sharp decline was the 2.4% decline in the first quarter of 1991.

According to the statistics office, the lockdown announced in March led to significant impacts on the economy. Many non-essential businesses were closed while travel restrictions affected industries like hotels and tourism.

As with most countries, the service industry was the worst-affected. Indeed, its weakness was responsible for about half of the overall decline in GDP. The hospitality industry contracted by 7.8% in the quarter.

The construction industry declined by 4.1% while the transport and warehousing fell by 5.2%. Household consumption declined by 0.3%. In the report, the office said:

“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 19 March.”

The 1.6% decline in New Zealand GDP compared with the 2.1% decline in Canada, 0.3% decline in Australia, and 2.0% decline in Japan.