How New Zealand’s strict lockdowns will cause a much deeper recession than Australia’s – with Jacinda Ardern’s takeaway food ban sparking a crisis unseen since the 1930s Depression
- New Zealand is expected to officially sink in recession on Thursday next week
- Westpac expecting GDP to contract by 11.5 per cent in the June quarter of 2020
- That would be much steeper than Australia’s equivalent record 7 per cent drop
The nation led by Labour Prime Minister Jacinda Ardern is expected to next week officially sink into recession for the first time since the Global Financial Crisis in 2009.
Her government, which introduced ‘wellbeing’ indicators, is now facing an economic downturn even more severe than the early part of the 1930s Great Depression.
The Westpac bank is forecasting Thursday’s official figures will show an 11.5 per cent contraction for the June quarter – a level significantly more severe than Australia’s record seven per cent plummet during the same period.
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The nation led by Labour Prime Minister Jacinda Ardern is set to next week officially sink into recession for the first time since the Global Financial Crisis in 2009. Her government, which introduced ‘wellbeing’ indicators, is now facing an economic downturn even more severe than the early part of the 1930s Great Depression
New Zealand’s stricter coronavirus lockdowns are set to cause a much deeper recession than Australia. Pictured is an empty Lambton Quay in the capital Wellington
New Zealand’s gross domestic product fell by 1.6 per cent in the March quarter as Australia’s economy shrunk by a much lesser 0.3 per cent despite the devastating summer bushfires.
In 1932, at the height of the Great Depression, the Kiwi economy plunged by seven per cent in one year.
Should a significant recovery fail to materialise in the September and December quarters, New Zealand would be suffering an even worse downturn than the period 88 years ago when a global calamity shattered farm exports.
Westpac senior economist Michael Gordon said New Zealand’s Alert Level Four lockdown – the equivalent of Melbourne’s existing Stage Four restrictions – had effectively closed down one third of the economy in April.
The popular ‘Eat Street’ in Rotorua, New Zealand is seen empty during the COVID-19 lockdown
A relatively deserted Parnell Rise as Aucklanders return to level three lockdown on August 13, 2020
‘The COVID-19 lockdown was one of the most extraordinary events in New Zealand’s economic history,’ he said.
‘Such a massive change inevitably comes with a wide margin of uncertainty.’
New Zealand went into a stricter lockdown on March 25 and emerged from them on June 8 as part of an elimination strategy.
Auckland however was shut down on August 11 after four cases were discovered in New Zealand’s biggest city.
During the first half of 2020, Australia’s states and territories implemented more moderate Stage Three restrictions, which closed non-essential businesses like cinemas, nightclubs, gyms and restaurants.
The Westpac bank is expecting Thursday’s official figures to show an 11.5 per cent contraction for the June quarter – a level significantly more severe than Australia’s record seven per cent plummet during the same period. Pictured is a restaurant in Wellington in June
Unlike New Zealand, Australia allowed restaurants to offer takeaway meals as customers were banned from dining in from the end of March.
Only Victoria has resorted to Kiwi-style restrictions but even under Labor’s Stage Four lockdowns, Premier Daniel Andrews’ government is still allowing restaurants to offer takeaway food.
During the June quarter, the UK’s economy contracted by 20.4 per cent as French GDP shrunk by 13.8 per cent drop as Canada’s economy plunged by 11.5 per cent.
Jacinda Ardern’s Labour Party is the favourite to be re-elected on October 17 despite the recession.
During New Zealand’s last recession, Labour’s last prime minister Helen Clark lost the November 2008 election – but she had already been in power for nine years.