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Markets

New Zealand economy posts record decline in 2020

  • "However, it's important to look forward," he said.
Published March 18, 2021

WELLINGTON: New Zealand's economy shrank at a record rate of 2.9 percent in 2020 due to the impact of the Covid-19 pandemic, official data released Thursday showed.

Statistics New Zealand said the economy contracted just one percent in the final quarter of 2020 but a coronavirus-induced recession earlier in the year meant the annual fall was the highest on record.

"The decline in annual gross domestic product is largely due to the effects of the Alert Level Four national lockdown earlier in 2020," it said.

A hard lockdown in New Zealand in March-April last year was instrumental in helping contain the virus, with only 26 deaths in a population of five million.

But it tipped the country into its first recession in a decade before the economy roared back with 13.9 percent growth in the third quarter.

Kiwibank chief economist Jarrod Kerr said the 1.0 percent fall in the fourth quarter was more than expected but understandable given the volatility caused by the pandemic.

He said the absence of international tourists meant there was also likely to be mild negative growth in the first quarter of 2021, putting New Zealand in a technical recession.

"However, it's important to look forward," he said.

"Vaccine rollouts and talks of a travel bubble with Australia -- and hopefully more countries into next year -- should support solid growth into 2022."

Finance Minister Grant Robertson said "it's not surprising the numbers are jumping around", pointing out New Zealand's economy had outperformed Australia, Britain, the United States and Japan. "Our economy remains strong." he said.

"We will stick to our plan that has successfully helped New Zealand through this pandemic."

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