New Zealand Faces Its Worst Economic Recession
Jacinda Ardern faces a stern challenge as her re-election nears (Wikimedia Commons).
New Zealand faces its worst economic recession since quarterly records began in 1977. With her imminent re-election in October, New Zealand Prime Minister Jacinda Ardern emphasized the likelihood of economic recovery.
Ardern has received global praise for her leadership in containing the pandemic within her country’s borders. New Zealand has recorded only twenty-five COVID-19 deaths and kept cases low since late May. This containment, however, came at the cost of closing the border and imposing a strict nationwide lockdown, leading to a sharp decline in economic activity.
According to figures published by Statistics New Zealand (StatsNZ) on September 17, the country’s GDP in the June quarter fell by 12.2 percent from the previous quarter. This fall represents “by far the largest on record in New Zealand,” said StatsNZ manager Paul Pascoe. Since New Zealand’s last recession in 2009, it had experienced 11 consecutive years of growth before the pandemic struck.
Paul Pascoe determined that the large shrink of GDP in the June quarter has much to do with the simultaneous implementation of the nationwide lockdown and border closures over this period.
To make matters worse, New Zealand faces the prospect of a second wave of COVID-19, having confirmed new cases in August for the first time in 102 days. This rise in cases caused New Zealand to reinforce the lockdown. Although Ardern lifted all COVID-19 restrictions in most regions on September 22nd, she kept Auckland, the economic hub of New Zealand, under lockdown measures, claiming that the city “needs more time.”
In response to the shrinking GDP, support for New Zealand’s governing Labour Party has waned. A poll result published by 1 News-Colmar Brunton on September 22 shows support for the Labour Party at 48 percent, down from 53 percent in July.
As the election approaches, Ardern displayed her confidence that economic recovery will occur in the next quarter, claiming that she “backs New Zealand’s rebound.” Furthermore, Minister of Finance Grant Robertson asserted “no doubt” that the September quarter will show a significant rebound.
"We expect the June quarter's record-breaking GDP decline to be followed by a record-breaking rise in the September quarter," said Michael Gordon, a senior economist at Westpac Bank.
Although the latest poll by 1 News-Colmar Brunton indicates that the Labour Party can get the majority of seats, economic policies remain a topic of heated discussion.