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New Zealand GDP Contracts 1.6% On Quarter In Q1

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New Zealand's gross domestic product shrank 1.6 percent on quarter in the first quarter of 2020, Statistics New Zealand said on Thursday.

That missed expectations for a decline of 1.0 percent following the 0.5 percent increase in the previous three months.

Service industries were down 1.1 percent on quarter, while primary industries fell 1.0 percent and goods-producing industries dropped 2.7 percent.

GDP per capita was down 2.2 percent and real gross disposable national income was down 1.6 percent.

On a yearly basis, GDP was up 1.5 percent - beating expectations for an increase of 0.3 percent and slowing from 1.8 percent in the three months prior.

Eight of the 11 service industries experienced falls in Q1, reflecting the decline in international visitors and the impacts of the lockdown measures on domestic activity. The alert level 4 lockdown affected the last six days, or about 7 percent, of the first quarter. Activity was limited to essential services only during this period. The restrictions affected the activity of most industries.

A 5.2 percent fall in transport, postal, and warehousing services was led by declines in air transport and transport support services. Retail, accommodation, and restaurants fell 2.2 percent, driven by a 7.8 percent decline in accommodation and food services. These industries were affected by the fall in international visitors, as countries imposed travel restrictions and closed their borders.

Education fell 1.7 percent due to the impact of the lockdown on delivery of some education services, such as early childhood education, and reduced international student numbers.

All three goods-producing industries were down in the March quarter. Construction was the greatest contributor to the drop, declining 4.1 percent. Most construction activity was not deemed essential during the alert level 4 lockdown.

Household spending declined 0.3 percent in the March 2020 quarter. This was influenced by weaker household spending on services, with restaurant meals and ready-to-eat food, international air passenger services, and accommodation services all contributing to the fall.

Household spending on durable goods fell 2.8 percent, with new and used motor vehicles contributing the most to the drop. The fall in household spending was partly offset by a rise of 5.4 percent in spending on non-durable goods.

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