Jamie Smyth in Sydney
New Zealand’s economy has powered out of a Covid-19 induced recession, growing by a record 14 per cent in the third quarter, reflecting authorities adept handling of the pandemic.
A resurgence in household spending drove the recovery as the easing of some of the world’s toughest social distancing restrictions prompted 11.1 per cent growth in service industries and 26 per cent growth in the goods producing sector.
However, the damage wrought by the strict nationwide lockdown imposed to suppress the virus was expressed in the annual growth figure, which shows economic activity fell 2.2 per cent in the year to the end of September.
New Zealand’s statistics agency also revised the decline in gross domestic product in the June quarter to 11 per cent, up from previous estimates of a 12.2 per cent contraction.
Grant Robertson, New Zealand’s finance minister, attributed the record growth to the government’s decision to “go hard and early” during the Covid-19 pandemic and offer support through a comprehensive wage subsidy scheme covering 1.8m workers.
“While New Zealand’s economy contracted in 2020, it is expected to rebound strongly in 2021, in line with countries we compare ourselves to, like Australia and the United States, and outperforming the United Kingdom and Japan relative to these countries’ 2019 starting point,” he said.
The UK posted a 15.5 per cent increase in GDP in the third quarter, although its economy contracted by 19.8 per cent in the June quarter. Economic activity in Australia grew by a more modest 3.3 per cent in the September quarter following a contraction of 7 per cent in the three months to end June.
New budget figures due to be published by the Australian government on Thursday are expected to show a similarly better than expected economic performance following the nation’s suppression of Covid-19.
New Zealand and Australia have both reported only a handful of new Covid-19 cases in recent weeks, with most in hotel quarantine.
Saul Eslake, an economist and fellow at University of Tasmania, said it was now abundantly clear from the experience of the past nine months that there can be no sustainable economic recovery unless the virus can be kept at bay.
“Because if it isn’t, then either governments will be forced to re-impose lockdowns (of varying severity), or even if they don’t, people will voluntarily impose restrictions on themselves – and that will remain the case until a vaccine has been widely distributed,” he said.