New Zealand: GDP now seen contracting at 5.0% this year – UOB

Economist at UOB Group Lee Sue Ann reviewed the latest GDP figures in New Zealand for the second quarter.

Key Quotes

“New Zealand’s GDP fell 12.2% q/q in 2Q20, following a revised 1.4% q/q fall in 1Q20 (-1.6% q/q previously). Primary industries were the most resilient in the quarter, down 8.7% q/q. Goodsproducing industries were the most severely impacted, falling 16.3% q/q, whilst services declined 10.9% q/q… Compared to the same period one year ago, New Zealand’s GDP fell by 12.4% y/y, the first y/y decline since the March 2010 quarter.”

“This is New Zealand's first recession since the 2008-2009 Global Financial Crisis, and its worst since 1987, when the current system of measurement began. Finance Minister Grant Robertson said the sharp economic decline was no surprise. The economic situation is likely to be a key issue in next month's election, which was delayed after an unexpected spike in COVID-19 infection cases in August.”

“The slightly stronger 2Q20 print relative to our expectations of -16.6% y/y has led us to revise our 3Q20 and 4Q20 prints of -6.1% y/y and -3.5% y/y, to -5.9% y/y and -4.2% y/y, respectively. This will see our full year 2020 GDP contraction less severe at -5.0%, compared to our previous forecast of -6.6%.”