New Zealand Economy Rebounds From Recession
The economy of New Zealand has rebounded strongly from the third-quarter recession, as huge monetary and fiscal incentives encourage consumer spending.
The solid economic recovery from what has been so unexpected and impactful is explained by New Zealand’s effective Covid-19 elimination strategies. The government was determined to defeat the virus as quickly as possible and applied some of the strictest lockdown measures in the world, which tipped the country’s economy into recession.
However, once these measures brought about the necessary results, everything resumed back to normal relatively quickly. With 2,324 confirmed cases of Covid-19 and 25 deaths, it’s clear that their strict approach was fully justified and efficient.
Increased Consumer Spending
Since the nation has eliminated community transmission of Covid-19 in May and managed to successfully contain occasional outbreaks since then, many people have gone on a spending spree.
In contrast to the second quarter, which incurred an updated 11%, total domestic product rose 14%, and economists predict a 12.9% increase. Compared to the year before, the economy has grown 0.4%, which is a much better outcome than the projected 1.8% decline.
With GDP dropping 9.6% in the UK and 3.8% in Australia during the third quarter from a year earlier, New Zealand has fared better than most countries.
Tourism Industry
The tourism industry, however, is still struggling because the border has remained closed to foreigners, and it’s set to continue that way for some time. As expected, retail, accommodation, hospitality and transportation sectors were affected notably by the lockdown and the international travel ban. Countless businesses have put hiring new staff members on hold, which is forecasted to increase the jobless rate during this year.
Government Support
To provide help and security to its nation, the government has not only put out $62 billion for financial support to protect jobs and revive the domestic demand, but the central bank has also reduced its interest rates significantly to decrease borrowing costs. This helped uplift various industries, but especially the housing market. The recuperation of the property market started during the third quarter and the property values, buyer demand, property sales volumes, and mortgage lending demonstrated remarkable force by the end of 2020.
According to the latest data from CoreLogic, the property value growth rate soared up in almost all parts of the country by 11.1% by January of this year, and there is no sign of slowing down anytime soon.
Industries That Led the Third-Quarter Increase
The increase in the third quarter was said to have been steered by services and construction industries, particularly retailing, manufacturing, residential building, among others. Here’s a quick overview of each:
- Household consumption increased 14.8% with cars, television and domestic air travel at the front.
- Construction increased by 52%.
- Manufacturing surged 17% from the second quarter.
- Investment surged 27% thanks to residential building.
- GDP per capita rose 13.8%.
- Exports expanded by 4.9%, imports 10.6%.
Surprising Help – Online Gaming To Help Improve the Economy
According to a government-released discussion document, New Zealanders spent approximately 381 million with offshore gambling providers in a span of 18 months during 2019 and 2018. With that in mind, the government has been considering introducing legal and licensed online casinos. Online casino NZ industry could potentially make significant contributions to the economy to help prevent a double-dip recession.
It’s no secret that the New Zealand gambling market has grown tremendously over the last decade. However, lottery games and sports betting are the only legalised gambling activities in the country, which offshore online casinos have taken advantage of.
