GDP shows expected impacts of moves to protect Kiwis against COVID-19Finance
Today’s GDP figures show the expected impacts of the decision to go hard and early to protect New Zealand against the global COVID-19 pandemic, which now means the economy has been able to open up faster than most countries around the world, Finance Minister Grant Robertson says.
GDP fell 1.6% in the March quarter from December, reflecting decisions to close New Zealand’s borders and enter Alert Level 4. This was within the range of economist expectations. Annual average GDP was up 1.5% from a year ago.
“We’ve always acknowledged that the global COVID-19 pandemic, and the measures put in place to protect New Zealanders will impact the March and June quarter GDP data. These measures have allowed us to get back to Level 1 more quickly than expected, and operate at levels that other countries aren’t able to,” Grant Robertson said.
The measures put in place during the March quarter included:
- New Zealand began refusing entry to all foreign nationals travelling from or transiting through China on February 3.
- On 14 March, announced anyone entering New Zealand from anywhere in the world, apart from the Pacific, was required to self-isolate for 14 days. On 19 March, announced the borders were closed to anyone who wasn’t a New Zealand citizen or resident.
- The country moved to Alert Level 3 on March 24, and moved to Alert Level 4 on March 26. About 9% of the March quarter was spent at Alert Levels 3 and 4,
Grant Robertson said this flowed through to activity in industries like accommodation, restaurants and bars, down 7.8%, and travel services for foreign tourists, down 8.5%. Disruptions to New Zealand’s forestry industry due to a glut of logs from Europe into China also had an impact, with forestry and logging activity down 5.2% in the quarter, while the impacts of the drought in parts of New Zealand also showed.
“The biggest impact of the global recession and Alert Level 4 public health restrictions will be seen in the current June quarter. Our investments like the $11 billion wage subsidy, tax refunds and the small business cashflow scheme are cushioning the blow for households and businesses through this.
“Now, our focus is on protecting jobs and supporting the economy to recover and rebuild through the investments made in Budget 2020 and by the COVID Response and Recovery Fund. By opening up the economy quicker than forecast, we’ve got a head start on our recovery.
“This is shown by the Oxford Government Response Stringency Index. New Zealand’s score at 22.22 is the same as Taiwan and one of the lowest in the world. It is more than half of Australia’s at 53.7 and countries like Sweden at 46.3.”