New Zealand plunges into recession as economy shrinks record 12%

New Zealand's economy plunged into recession for the first time in a decade on Wednesday, posting a record contraction in the June quarter due to the coronavirus pandemic, as Prime Minister Jacinda Ardern heads into next month's general election.

"The 12.2-per cent fall in quarterly GDP is by far the largest on record in New Zealand," the national statistics agency said.

The reporting period covers April to June, coinciding with a strict lockdown that began in late March and began easing in late May.

Stats NZ spokesman Paul Pascoe said the closure of New Zealand's borders since March 19 had also had a huge impact of some sectors of the economy.

"Industries like retail, accommodation and restaurants, and transport saw significant declines in production because they were most directly affected by the international travel ban and strict nationwide lockdown," he said.

"Other industries, like food and beverage manufacturing, were essential services and fell much less."

The second-quarter decline follows a 1.6-per cent contraction in the first three months of 2020, confirming widespread expectations that New Zealand is in recession.

However, the 12.2-per cent figure was below the 16 per cent predicted by the government this week and fell well short of the 23.5 per cent forecast in the budget last May.

Finance Minister Grant Robertson said the better-than-expected outcome was due to policies implemented by Ardern's government, which will go to the polls seeking a second term on October 17.

"Going hard and early means that we can come back faster and stronger," he said.

"Economists expect the current September quarter to show a record jump back to growth in the economy."

New Zealand has recorded only 25 coronavirus deaths in a population of five million and cases have been largely contained since late May, aside from a flare-up in Auckland last month.

But the opposition National Party said Ardern's centre-left government had failed New Zealanders by failing to keep the economy moving.

National's finance spokesman compared the response to Australia, which recorded an economic contraction of seven per cent in the June quarter after adopting a more flexible approach to lockdowns and border controls.

"The lack of pragmatism and a clear plan from (Ardern's) Labour has made the economic hole deeper and the impact harder than it needed to be," he said.

"This economic damage was recorded in three months but will last for decades to come -- this is the deepest recession in living memory."

New Zealand most recent recession was in 2008-09 and until the first three months of this year, it had recorded non-stop quarterly growth since 2010.

Kiwibank chief economist Jarrod Kerr said the scale of the June quarter decline was unprecedented.

"We've never seen anything like this. It was traumatic," he said.

"Service exports were stonewalled, and down 40 per cent in the quarter, consumption was down 12 per cent, and investment was slashed by 20 per cent."

But he said the figure was a one-off that was set to be followed by a growth surge of 10 per cent in the September quarter, which would also be a record.

"Businesses and households have clearly adapted to trading in a world with limited face-to-face contract," he said.