New Zealand is going through its deepest recession in decades, in the aftermath of strict measures in response to the Covid-19 pandemic which were widely praised.

The GDP of the country shrank by 12.2% between April and June as the lockdown and border closures hit.

It is considered as New Zealand’s first recession since the global financial crisis and its worst since 1987, when the current system of measurement started. However, the government hopes that its pandemic response will lead to a quick recovery.

The country of nearly five million was briefly declared virus-free and despite having a handful of cases, it has only had 25 deaths. It is likely that the key issue in the next month’s election will be the economy, which was delayed after an unexpected spike in Covid-19 cases in August.

Paul Pascoe, the Stats NZ spokesman said that the measures implemented since 19 March have had a huge impact on some of the sectors of the economy. The Transport, retail, accommodation and restaurant sector witnessed significant decline in production as they were directly affected by the international travel ban and strict nationwide lockdown, he said.

The government said that the success in suppressing the virus is likely to help recovery prospects. Grant Robertson, the New Zealand Finance Minister said that the GDP numbers were better than expected, and suggested a strong recovery ahead.

“Going hard and early means that we can come back faster and stronger,” he said.

In the light of New Zealand’s strong response to the virus, the economists are also predicting a swift recovery. “We expect the June quarter’s record-breaking GDP decline to be followed by a record-breaking rise in the September quarter,” said Westpac Senior Economist Michael Gordon.

However, the forecasts released by Treasury suggested massive debt and continuing disruptions are likely to delay full recovery. New Zealand’s opposition party accused the government of a lack of pragmatism that made the impact worse than it needed to be.

The steeper drop was recorded in New Zealand as compared to the neighbouring Australia, where the lockdown was less severe. However , the state of Victoria has faced a second lockdown, which is likely to weigh on Australia’s economic recovery.

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