New Zealand's economy saw its biggest contraction in 29 years in the first quarter as travel restrictions took hold and the country moved toward a lockdown to stop the spread of covid-19, but the bigger hit will come in the June quarter.
The economy fell 1.6 per cent in March, the first quarterly fall since December 2010 and the largest fall since March 1991, Stats NZ said. The economy grew 0.5 per cent in the December quarter.
While economists had forecast a wide range of numbers, from a 2.7 per cent contraction to 0.6 per cent growth, the data is unlikely to come as a surprise.
On the year, the economy fell 0.2 per cent after growing at an annual pace of 1.8 per cent in the December quarter.
"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 March 19," national accounts senior manager Paul Pascoe said.
The first quarter only measured the first week of lockdown. Westpac economist Dominick Stephens told Heather du Plessis-Allan that the second quarter could see an additional 13.8 per cent decline.
"That would take the economy to a total decline of about 16 per cent."
He said that the main point of these numbers will be what the numbers look like once the economy bounces back.
"The data I've been seeing in recent times suggests we are in for a severe recession, but not as severe as originally thought."
Stephens expects we will bounce back to around 4.5 per cent below to where we were before Covid-19.Â
Travel restrictions were applied to Chinese visitors on Feb. 2 and the borders were closed to all foreign nationals on March 19.
Non-essential businesses, however, were only closed for six days, or about 7 per cent of the March quarter, once the lockdown was imposed at 11:59pm on March 25.
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