Gross domestic product (GDP) rebounded 14.0 percent in the September 2020 quarter, following a revised 11.0 percent fall in the previous quarter where COVID-19 restrictions impacted economic activity, Stats NZ said today.
There were fewer restrictions on activity in the September 2020 quarter than during the COVID-19 lockdown-impacted June 2020 quarter, though Auckland was at alert level 3 in August.
“This resulted in the strongest quarterly growth in GDP on record in New Zealand, as the economy bounced back from the lockdown earlier in the year when non-essential businesses closed,” national accounts senior manager Paul Pascoe said.
“GDP was up compared with the September 2019 quarter, indicating that overall we’ve managed to return to a pre-COVID level of activity. However, the effects of COVID-19 have had specific and varied impacts at industry level and, for some industries, these may persist for some time.”
While the quarterly result looks impressive, it follows a record fall in the June 2020 quarter.
“Even though activity across the country largely returned to pre-COVID-19 levels, we haven’t recouped all the activity or production lost as a result of the lockdown in the June 2020 quarter,” Mr Pascoe said.
This is seen in the 2.2 percent decline in GDP over the year to September 2020, which is the largest annual decline recorded in the GDP series.
Measures to slow the spread of COVID-19 in the June 2020 quarter led to large falls in GDP worldwide. Many countries have seen large rebounds in activity in the September quarter as COVID-19 restrictions were loosened.
While impacted by the COVID-19 containment measures adopted by individual governments, differences in GDP growth rates also reflect the difference in the structure of each country’s economy. This includes the relative importance of industries that have been more impacted by COVID-19 restrictions.
In March and April New Zealand imposed more stringent measures to contain COVID-19 than some other countries, then moved more quickly to less stringent restrictions later in the year. See the international COVID-19: Government Response Stringency Index for more information.
The rebound in economic activity in the September quarter can also be seen on an industry level; industries that saw bigger falls in activity in the June quarter generally saw larger rebounds in the September 2020 quarter.
Service industries, which produce about two-thirds of New Zealand’s GDP, rose 11.1 percent in the quarter, after declining 9.8 percent in the June 2020 quarter. Goods-producing industries grew 26.0 percent and primary industries 4.6 percent, after falling 15.9 and 7.1 percent in the June 2020 quarter respectively.
The industries contributing the most to quarterly growth included retail trade and accommodation, up 42.8 percent; construction, up 52.4 percent; and manufacturing, up 17.2 percent.
“Retail sales values recorded the largest September 2020 quarter rise since the series began in 1995, as people spent more on household goods, cars, and food, while residential building was at the highest-ever levels by volume,” Mr Pascoe said.
“The retail trade and accommodation, and construction, industries were both significantly affected by the alert level 4 restrictions in the previous quarter. Accommodation, restaurants, and bars have also been affected by New Zealand’s border being closed to international travellers since mid-March. This sub-industry is down 11.8 percent through the year to September 2020.”
See Retail sales recover in the September 2020 quarter and Building activity bounces back for more information.
Transport, postal, and warehousing rose 16.0 percent, after falling 39.0 percent in June. Annually, it remains almost 20 percent (19.3 percent) down on the level of activity it experienced in the year to September 2019, reflecting the impact of reduced international and domestic air travel.