The NZ economy recovered quickly from the impact of the strict Covid-19 Alert Level 4 lockdown back in March and April 2020, with Q3 GDP lifting a whopping 14% quarter on quarter, bringing the level of activity back to pre-COVID levels. This momentum continued following the strong lift over the second half of 2020, NZ’s stout economic recovery over Q3 and Q4 2020 and through 2021. GDP data early 2021 showed a drop of 1% for the final quarter of 2020 and business confidence waning due to the tourism sector and the previously booming construction sector coming up against constraints of limited labour supply and delays of imported materials. The economic gauges fluctuated considerably through 2021 due the unprecedented effect of the corona virus pandemic on local and global economies.
Prior to the late 2021 Covid outbreak the New Zealand economy was preforming strongly moving through Q3 2021 with very low unemployment and Reserve Bank imposing OCR increases. NZ GDP contracted 3.7% over Q3 2021 largely due to the Covid-19 Delta outbreak which sent NZ back into Alert L4 lockdown, hampering non-essential business activity. Once again, the NZ economy demonstrated remarkable resilience in the face of Covid-19 and was expected the economy will return to pre-Delta levels over the first half of 2022. NZ must now adjust to living with the continued impacts of COVID-19 and growing headwinds from the sharp increase in the cost of living and rising interest rates with OCR increased to 3.0% in August, 3.5% in October and to 4.25% in November 2022. New Zealand’s economic growth outlook is looking particularly low for the next couple of years as high inflation, rising interest rates, the war in Ukraine, slowing construction, softer agriculture production and more cautious households will remain big themes through 2023.
