NZ GDP slides backwards 1.6 per cent

Ben McKay
NZ Finance Minister Grant Robertson says the June quarter will see the recession's full impact

New Zealand's economy contracted by 1.6 per cent in the first three months of 2020, its largest quarterly drop in 29 years.

On Thursday morning, Stats NZ revealed the scale of New Zealand's first quarter economic downturn, a hit that surpassed any quarter of the global financial crisis of 2008-09.

Then, the Kiwi economy travelled backwards for six straight quarters.

Both Australia, which registered a 0.3 per cent slide in the first three months of the year, and New Zealand are bound for deep recessions this year.

New Zealand's second-quarter hit is likely to be profound given the first quarter took in just one week of the country's tough 51-day lockdown.

The first quarter did include closed borders to China for two months, and other changes through March up to their closure on March 19.

The government response led by Prime Minister Jacinda Ardern allowed New Zealand to open its domestic economy back up earlier this month.

Finance Minister Grant Robertson said the 1.6 per cent hit was "within the range of economist expectations" and the June quarter would see "the biggest impact of the global recession".

"Our investments like the $NZ11 billion ($A10.28 billion) wage subsidy, tax refunds and the small business cashflow scheme are cushioning the blow for households and businesses through this," he said.

In the January to March quarter, service industries, which make up two thirds of the Kiwi economy, fell by 1.1 per cent.

Goods-producing industries, which make up a fiith of the economy, plunged by 2.7 per cent.

The construction industry suffered the biggest fall in real terms, dropping by $NZ166 million ($A156 million) as projects were deemed non-essential during lockdown.

Primary industries also dropped by one per cent.

New Zealand's contraction sits within a bracket of drops experienced by similar OECD countries.

The Australian fall was 0.3 per cent, in Canada it was 2.1 per cent, in Japan it was 0.6 per cent, in the UK it was 2.0 per cent and in the USA it was 1.3 per cent.