New Zealand is officially in a recession for the first time in 11 years.

Stats New Zealand says in the June 2020 quarter:

• New Zealand economy declined 12.2 percent, the largest decline on record.

• Service industries fell 10.9 percent

• Primary industries were down 8.7 percent

• Goods producing industries fell 16.3 percent

• GDP per capita fell 12.6 percent

• real gross disposable national income was down 12.3 percent

• annual GDP in the year to June 2020 declined by 2.0 percent.

Largest quarterly fall in New Zealand economy on record

Economic activity, as measured by gross domestic product (GDP), was down 12.2 percent in the June 2020 quarter.

This is the largest quarterly decline in GDP on record. On an annual basis, GDP declined 2.0 percent over the year ended June 2020.

Service industries, which make up two-thirds of the economy, fell 10.9 percent.

Goods producing industries, which make up about one-fifth of the economy, declined 16.3 percent, while primary industries fell 8.7 percent.

Impact of COVID-19

New Zealand started the June 2020 quarter in alert level 4 lockdown, with strict restrictions on the activities of both households and businesses. As a result, many parts of the economy were not able to operate at a normal, or near normal, level of capacity during this period.

Restrictions gradually eased through the June 2020 quarter, with alert level 3 in place from 27 April, alert level 2 from 13 May, and alert level 1 in place from 8 June 2020. 

New Zealand’s border closed to international travellers on 19 March 2020 and remained closed throughout the June 2020 quarter.

Services and goods-producing industries drive fall in GDP

Service industries fell by 10.9 percent and were the largest contributor to the decline in GDP. Ten of the 11 service industries had negative results in the quarter.

Retail, accommodation, and restaurants was the largest contributor to the decline, with a fall of 25.2 percent.

This was driven by a 47.4 percent decline in accommodation and food services, with businesses significantly affected by the fall in international tourists and the physical restrictions in place under alert levels 2 to 4.

Similar impacts were seen in transport, postal, and warehousing, which fell by 38.7 percent due to sharp declines in air transport and transport support services; arts and recreation services, which fell by 24.2 percent; and professional, scientific, technical, administrative and support services, which fell by 11.2 percent, driven by declines in travel agency and tour services, and employment and other administrative services.

All three goods-producing industries declined, led by a 25.8 percent fall in construction. Under alert level 4 most construction activity was deemed non-essential.  See COVID-19 slows building activity.

Manufacturing declined 13.0 percent in the quarter, with all subindustries recording falls.

The largest declines were seen in transport equipment, machinery and equipment manufacturing (down 15.8 percent); metal product manufacturing (down 21.0 percent); and petroleum, chemical, polymer and rubber product manufacturing (down 12.6 percent). Food, beverage, and tobacco manufacturing showed a softer decline of 2.2 percent, with parts of this subindustry deemed essential and able to operate under alert level 4.