GDP drops 1.6%, largest quarterly fall in 29 years

New Zealand's Gross Domestic Product (GDP) has decreased by 1.6 per cent in the first quarter of 2020, as the economic impact of Covid-19 unfolds.  

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It fell 1.6 per cent in the first quarterly report this year. Source: 1 NEWS

It is the first snapshot of GDP since Covid-19 halted a significant amount of New Zealand's economic activity. 

It looks at GDP for the first three months of 2020. 

National accounts senior manager Paul Pascoe said it was the "largest quarterly fall since the 2.4 percent decline in the March 1991 quarter".

"The 1.6 per cent fall surpassed quarterly falls during the global financial crisis in the late 2000s."

Mr Pascoe said the results showed a widespread drop in economic activity "as travel restrictions took hold and the country moved towards lockdown". 

Only seven per cent of the March quarter was in Alert Level 4 lockdown. 

"Industries related to international travel, such as accommodation and transport, began to feel the effects of Covid-19 earlier in the quarter, with activity dropping significantly once the borders closed on 19 March," he said. 

The hospitality industry was the most impacted, falling 7.8 per cent. 

Australia's GDP fell only 0.3 per cent, Canada fell 2.1 per cent, the UK fell 2 per cent and the US fell 1.3 per cent in the same time period. 

The contraction, the first since 2010, saw annual growth fall to 1.5 per cent, this was compared with 3.1 per cent in the year ended March 2019.  

Compared to other quarters, last year GDP increased by 0.7 per cent in the September quarter and increased 2.7 per cent over the year to September 2019. That was boosted by retail spending, which had a growth of 2.4 per cent in the quarter.