Stronger-than-expected New Zealand’s GDP data for the first quarter of 2021 showed that the country avoided a second pandemic recession. Gross domestic product jumped 1.6% in the first quarter of 2021, after a 1% drop in the fourth quarter of 2020.
Following the strong GDP data, the New Zealand dollar jumped around 0.8% to reach the 0.7101 levels losing its gains and fall back to trade around the 0.7050 levels.
New Zealand's success in containing Covid-19 pandemic has allowed the country to reopen its domestic economy ahead of other developed nations, leading to an increase in employment rates and consumer spending. Westpac said economic growth is estimated to be at 0.8% above levels prior to the global coronavirus outbreak.
The recovery process initially started with by better-than-expected readings of key indicators such as employment and retail spending in recent months that prompted the central bank to signal a move away from the stimulus monetary policy measures adopted during the Corona pandemic.
The growth was largely driven by the booming property market and fiscal and monetary stimulus, although concerns about housing affordability prompted the government and the Reserve Bank of New Zealand to take the necessary measures to calm the market.