New Zealand’s economy surged 2.8 percent in the Q2

New Zealand’s economy surged 2.8 percent in the second quarter, official data showed on Thursday, although analysts said the country’s latest Covid-19 lockdown had likely stalled momentum.

The growth figure for the April-June period was more than double market forecasts, partly boosted by the opening of a short-lived travel bubble with neighbouring Australia, reports BSS.

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The latest figure follows growth of 1.4 percent in the previous quarter, revised down from 1.6 percent, Statistics New Zealand said.

On an annual basis, the economy grew more than 17 percent in the 12 months to the end of June, including a one-off 13.9 percent boost in the July-September quarter after New Zealand lifted its initial lockdown.

Kiwibank chief economist Jarrod Kerr said the opening of a quarantine-free travel bubble between Australia and New Zealand helped “supercharge” some sectors of the economy.

“Fewer Covid restrictions and the trans-Tasman travel bubble opening provided a boost to transport and retail activity,” he said.

The bubble opened in April but shut in July as Australia struggled with numerous outbreaks of the highly transmissible Delta variant.

The prospects of its reopening soon appear remote as New Zealand battles its own Delta outbreak, which emerged in the country’s largest city Auckland in mid-August.

Kerr said the outbreak — which prompted a three-week national lockdown that is still being enforced in Auckland — meant the strong growth recorded in the second quarter was already “old news”.

“Delta has disrupted the recovery and is now dominating,” he said.

“We are expecting a seven percent fall in Q3 as a result of lockdown… but the current disruption is expected to be fleeting and followed by speedy rebound in the December quarter.”

He said the prospect of a boost in growth later this year meant the central bank was set to hike its base rate next month from a record low of 0.25 percent.


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