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The New Zealand economy rebounded sharply from the recession in the third quarter, achieving a so-called V-shaped recovery as massive fiscal and monetary stimulus fueled consumer spending.
Gross domestic product jumped 14% from the second quarter, when it contracted a revised 11% rate, Statistics New Zealand said in Wellington on Thursday. Economists forecast a gain of 12.9%. Compared with a year earlier, the economy grew 0.4%, confusing consensus forecasts of a 1.8% decline.
New Zealanders have been on a spending frenzy since the country eliminated community transmission of COVID-19 in May and then managed to contain sporadic outbreaks. However, the border remains closed to foreigners, crippling the tourism industry, and many companies have put their investment and recruitment plans on hold, which is expected to drive up the unemployment rate in 2021.
The V-shaped economic rebound is “a rationale for the COVID-19 elimination strategy that New Zealand has pursued, as it has supported a strong economic recovery after what has been an unprecedented shock,” said Paul Bloxham, Chief Economist for Australia and New Zealand. at HSBC in Sydney. Yet “the closure of international borders to the movement of people weighs on tourism and other service exports, and is expected to continue to do so for some time.”
The New Zealand dollar rose after the GDP report and bought 71.29 US cents at 3:52 p.m. in Wellington. The currency has gained 5.5% in the past three months and was appreciating ahead of its release following Prime Minister Jacinda Ardern’s announcement.plans to offer Covid-19 vaccinesto the entire population in the second half of 2021.
The economy’s rapid rebound to pre-COVID levels was a rare feat, said Stephen Toplis, head of research at the Bank of New Zealand in Wellington.
“We can only identify three other countries that have achieved ‘full recovery’: Taiwan, China and Ireland,” he said. “New Zealand is definitely a very small minority.”
The government’s determination to eliminate the virus saw it impose one of the tightest lockdowns in the world, but allowed economic activity to resume faster once it was eradicated. New Zealand has recorded 1,744 confirmed cases of COVID-19 and only 25 deaths.
A new community outbreak in mid-August necessitated a second six-week lockdown in Auckland’s largest city, but the country has fared better than many of its peers. UK GDP fell 9.6% in the third quarter from a year earlier, while Australia’s fell 3.8%.
The government pledged NZ $ 62 billion ($ 44 billion) in budget support to help revive domestic demand and protect jobs, while the central bank cut interest rates and shut down. launched into quantitative easing and term lending programs to further lower borrowing costs.
This put a rocket on the housing market, with prices reaching new records.
Still, the Reserve Bank and some economists have warned that the economy could contract in the fourth quarter and even face a double-dip recession early next year, citing slowing global growth and the possibility that the border remains closed to most visitors in the second half of 2021.
Other details
The third-quarter expansion was driven by construction and service industries – particularly retail, accommodation and food services, the statistics agency said.
- Manufacturing output increased 17% from second quarter
- Construction jumped 52%
- Household consumption rose 14.8%, driven by cars, televisions and domestic air travel
- Investment jumped 27% thanks to residential construction
- Exports increased 4.9%, while imports increased 10.6%
- GDP per capita soared 13.8%
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