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New Zealand GDP Q3 2021

New Zealand: The economy contracts sizably in Q3 amid lockdowns

GDP fell 3.7% in seasonally-adjusted quarter-on-quarter terms in Q3, amid the reinstatement of Covid-19 restrictions. The result, which followed Q2’s 2.4% increase, was somewhat better than market expectations. Meanwhile, on an annual basis, GDP contracted 0.3% in Q3, contrasting Q2’s 17.9% jump.

The quarterly downturn came on the back of a marked contraction in both domestic and foreign demand. Private consumption plummeted 7.6% (Q2: -1.1% s.a. qoq), while fixed investment fell 5.3% in Q3 (Q2: -2.2% s.a. qoq). Moreover, government spending growth lost some steam (Q3: +1.8% s.a. qoq; Q2: +2.0% s.a. qoq).

Meanwhile, exports plunged 4.8% in Q3 (Q2: +18.7% s.a. qoq), while imports expanded 5.4% in the quarter after increasing 0.4% in Q2.

Commenting on the release, Lee Sue Ann, economist at United Overseas Bank, stated:

“Taking into account today’s numbers, our GDP forecast for 2021 is penciled in at 5.3%. The resilient labour market and gradual reopening of borders should see the New Zealand economy on a sustainable growth path, although the Omicron variant poses uncertainty. Just earlier today (16 December), New Zealand reported its first case of the Omicron variant, prompting experts to urge the government to delay opening the border, restrict passengers from the UK, and reconsider allowing patients to isolate at home. On the upside, New Zealand is now one of the most vaccinated countries in the world. As of 14 December, about 73.5% of its eligible population had been fully vaccinated.”

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