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NZ
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IND
Summary
- NZ’s economic activity increased by 14% in the September quarter, posting largest quarterly rise on record.
- The services sector was the main contributor to the September quarter recovery, rising by 11.1% with activity in retail, accommodation and restaurant industries increasing 43%.
- Government’s policy of going hard and early resulted in the September bounce, but full economic effects are yet to be realised in NZ and global economy.
Economic activity in NZ rebounded with GDP rising 14% in the September quarter, recuperating from lockdown in March/April that resulted in the closure of several businesses and halting activity altogether.
The gain in the September quarter came after the NZ economy contracted in 2 consecutive quarters of March and June.
The June quarter witnessed a record fall of 12.2%, most extensive by far, but the economy began to recover from the September quarter as businesses started opening from June onwards.
Source: Stats NZ, dated: 17 December 2020
However, annual GDP fell by 2.2% for the year ended September reflecting that robust growth in September did not fully compensate for the economic shock of COVID-19 and the resulting measures to contain it.
Despite this fall in annual GDP, NZ economy is performing well relative to its peers-Australia, UK, US, and Canada, who also witnessed a rise in the September quarter, but NZ is the sole one to eliminate losses experienced in prior quarters.
The rise in GDP was led by services and goods-producing industries
Paul Pascoe Statistics NZ national accounts senior manager stated that the economy has managed to return to pre coronavirus levels as GDP was higher in Q3 of 2020 compared to GDP in the September quarter of 2019.
However, there have been varied impacts of COVID-19 for some industries which might continue for some time, he added.
He stated that retail sales values added to the most considerable rise for the September quarter since the series started in 1995. Nevertheless, few sub-industries were significantly affected by Alert level 4 restrictions and border closures for international travellers.
Some of the highlights of the contributors to the September quarter GDP and annual industrial level performance includes of the following:
- Construction was the most significant contributor to GDP growth in the September quarter, driven by solid activity in construction services and residential construction but was down 5.1% annually.
- Service industries was the main contributor to the rise in GDP with each of 11 service industries growing in Q3, witnessing an increase of 11.1%.
- The services industry was driven by retail, accommodation, and restaurants category, up by 42.8% but this subindustry declined 2.6% over the year to September 2020.
- Business services also added to the September quarter growth, rising by 8.4% while arts, recreation, and other services also contributed by rising 26.8% in Q3.
- Transport, postal and warehousing was down 20% annually but was up 16% on the June quarter.
Source: Stats NZ, dated: 17 December 2020
Finance Minister Grant Robertson stated that the bounce-back was due to government’s hard and early policy during coronavirus. However, he added that the full economic effects of coronavirus were yet to be realised in NZ and globally.
