What is the significance of the absence of international tourists for Q1 2021 growth?

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The absence of international tourists is expected to contribute to mild negative growth in New Zealand's first quarter of 2021, potentially leading to a technical recession.

The ongoing lack of international visitors is likely to result in a mild contraction of New Zealand's economy during the first three months of 2021. This development could place the country into a technical recession, a condition defined by two consecutive quarters of negative economic growth. The impact of the Covid-19 pandemic has significantly influenced economic performance, as evidenced by the record 2.9 per cent contraction in 2020.
Continued Impact on Tourism Sector

The continued absence of international tourists directly affects sectors reliant on inbound travel, such as hospitality and related services. While the economy experienced a rebound of 13.9 per cent in the third quarter of 2020 following an earlier lockdown, the persistent border restrictions mean this vital revenue stream remains unavailable. This prolonged shortfall is a key factor contributing to the projected mild negative growth for the first quarter of 2021.
Potential for Technical Recession

A technical recession is typically characterised by two consecutive quarters of negative gross domestic product (GDP) growth. Following a 1.0 per cent contraction in the final quarter of 2020, any further negative growth in the subsequent quarter would meet this definition. This scenario highlights the ongoing vulnerability of the economy to external factors, despite efforts to contain the virus and support domestic recovery.
Outlook for Future Growth

Looking ahead, prospects for economic recovery are linked to the progress of vaccination programmes and the potential establishment of travel bubbles. Discussions regarding a travel bubble with Australia, and the possibility of expanding this to other countries in the following year, are anticipated to support more robust growth into 2022. These developments are seen as crucial for stimulating further economic expansion and moving beyond the current challenges.

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What is the significance of the absence of international tourists for Q1 2021 growth?

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