New Zealand's Delta outbreak sunk economic output in the September quarter, with GDP falling by 3.7 per cent.
Stats NZ said the figure, released on Thursday, was the second largest fall since it started counting in 1986.
Finance Minister Grant Robertson noted the drop was less than expected, with the Reserve Bank forecasting 7.0 per cent, and ANZ predicting 4.5 per cent.
"A decline in the September quarter was not unexpected ... but the strength of the economy that had built up before the outbreak put us in a strong position to cushion the impacts of Delta," he said.
Stats NZ spokeswoman Ruvani Ratnayake said four industries were hardest hit: retail, accommodation, and restaurants; manufacturing; construction; and arts and recreation.
The fall follows two steady quarters of growth - 2.8 per cent to June and 1.4 per cent to March - as New Zealand enjoyed months without widespread COVID-19 community transmission.
That run ended in August, when the Delta variant arrived from NSW, courtesy of a border leak.
New Zealand spent three weeks in lockdown from August 17, while Auckland - home to one third of the population and 40 per cent of the country's economy - stayed under restrictions for more than three months.
Almost 10,000 Kiwis have caught the virus in the latest outbreak, and 21 - of New Zealand's overall toll of 47 fatalities - have died.
In the September quarter, household consumption expenditure fell by 7.5 per cent and investment expenditure dropped by 5.3 per cent.
The annual GDP figure to September 30 is a 4.9 per cent rise, however, Stats NZ advises caution in using the figure due to COVID disruptions.
ANZ New Zealand chief economist Sharon Zollner struck an optimistic note in her assessment of the figures, saying, "We're hopeful that things will pick up largely where they left off ahead of lockdown".
"The relatively small contraction suggests many businesses have learned to operate better through lockdown compared to 2020. However, for some the economic pain is still immense," she said.
"Hopefully, the strong labour market and gradually reopening border puts the economy on a sustainable growth path, but forecast uncertainty remains very high."
Australian Associated Press
