Statistics New Zealand revealed primary industries led the fall in GDP, down 1.2 percent over the March quarter. Goods producing industries also edged lower by 0.1 percent.
“We saw lower output in the food, beverage, and tobacco manufacturing sub-industry; and the agriculture, forestry, and fishing industry,” Stats NZ senior manager Ruvani Ratnayake said.
“These declines corresponded to falls in related exports categories, including dairy products; meat products; agriculture and fishing products; and other food, beverage, and tobacco products.”
Exports decreased by 14.3 percent during the quarter, up 1.9 percent annually, while imports fell 2.8 percent, up 17.3 percent annually.
The service industry, which makes up two-thirds of the economy, saw mixed results but remained flat overall.
“The services industries saw a range of results in the March 2022 quarter. Education rose as early childcare centres were able to reopen to greater capacity, while activity in retail trade and transport support services was down in what is traditionally New Zealand’s peak tourist season,” Ratnayake said.
The result was worse than the banking industry predictions of a flat result and significantly worse than the New Zealand Reserve Bank’s expectation of a 0.7 percent increase.
The March quarter was marked by Omicron, the start of easing border restrictions, the Russian invasion of Ukraine, and the rapidly accelerating cost of living and inflation.
Michael Gordon, the acting chief economist at Westpac bank, noted that despite the easing of official restrictions, many people during the period placed self-determined restrictions on themselves in response to Omicron.
“People stayed away from retail spaces out of caution, and the surge in infections meant that worker absenteeism proved to be a major headache for many businesses,” he said.
Finance Minister Grant Robertson said the drop in GDP was a sign of “very challenging” global period.
“We rely on our exports and that’s obviously been the biggest impact in this quarter,” he told 1News.
Robertson said it would be “incredibly hard” to predict if it was a signal for an incoming recession, which is defined as two consecutive quarters of negative growth in GDP.
The Opposition party said the data was “more bad news” for people already struggling with the cost of living crisis.
“The risks for families and businesses are serious. The government must front-up to the reality of New Zealand’s economic situation, set out a plan to address inflation and drive productive growth,” National’s finance spokesman Nicola Willis said.
ACT Party Leader David Seymour said the GDP numbers showed the country was “halfway down the road to recession.”
“The prime minister is going to great lengths to say it’s all global headwinds, but that’s just spin. Australia’s economy grew in the same period, by 0.8 percent, an annualised 4 percent better than New Zealand,” he said in a statement.
The annual GDP growth remains positive, up 5.1 percent compared to the same quarter in 2021.
