How Jacinda Ardern's lockdowns have caused an even WORSE recession than feared – with the New Zealand economy plunging by 12.2% in just three months

New Zealand's strict COVID-19 lockdown has plunged the nation into recession for the first time in a decade.

The country, led by Prime Minister Jacinda Ardern, saw its economy shrink by a record 12.2 per cent in the June quarter.

The eye-watering figures, released on Thursday by Statistics New Zealand, are significantly more severe than Australia's record seven per cent plummet during the same period. 

The figures are also far worse the Westpac bank's prediction of an 11.5 per cent decline and marked New Zealand's first technical recession since the Global Financial Crisis in 2009.

The second-quarter plunge followed a downwardly revised 1.4 per cent contraction during the first three months of 2020. 

The nation, led by Prime Minister Jacinda Ardern, saw its economy shrink by a record 12.2 per cent in the second quarter

The popular 'Eat Street' in Rotorua, New Zealand is seen empty during the COVID-19 lockdown

The second quarter reporting period, from April to June, happened in the middle of the country's first lockdown when thousands of businesses were forced to close.

New Zealand went into a strict lockdown on March 25 and emerged from them on June 8 as part of an elimination strategy. 

Residents were ordered to stay home to prevent the deadly virus from spreading. 

Figures showed construction activity was down 26 per cent, manufacturing fell by 13 per cent, and household spending was down by 12 per cent when compared with the previous quarter. 

Stats NZ spokesman Paul Pascoe said the closure of New Zealand's borders since March 19 had also had a huge effect 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 12.2 per cent quarterly plunge in economic activity, however, was less serious than the 16 per cent plummet predicted by the government this week and fell well short of the 23.5 per cent forecast in the May budget.

A relatively deserted Parnell Rise as Aucklanders return to level three lockdown on August 13, 2020

The Westpac bank is expecting Thursday's official figures to show an 11.5 per cent contraction for the June quarter - a level significantly more severe than Australia's record seven per cent plummet during the same period. Pictured is a restaurant in Wellington in June

Kiwibank Chief Economist Jarrod Kerr said there were few surprises in the numbers.

'You lock up the economy, activity falls,' he said. 

'The focus must now turn to the recovery. And the current quarter looks pretty good. It' the path we take over the next three years that needs attention.'

Mr Kerr predicted GDP would jump by 10 per cent in the third quarter, but said more needs to be done over the medium term to return the nation to full employment.

Finance Minister Grant Robertson said the lockdown was necessary to save thousands of lives and get on top of the virus so the economy could bounce back faster.  

New Zealand has recorded 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.

Opposition leader Judith Collins slammed the Government's handling of the pandemic, saying National would 'not let COVID-19 into New Zealand'

A shopper makes his way into a store offering a closing down sale in Auckland, New Zealand

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 Paul Goldsmith compared the response to Australia, which recorded an economic contraction of seven percent 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.

New Zealand's economy shrank by a record 12.2% in the second quarter due to a strict coronavirus lockdown, but forecasts indicate activity is bouncing back

During the first half of 2020, Australia's states and territories implemented more moderate Stage Three restrictions, which closed non-essential businesses like cinemas, nightclubs, gyms and restaurants. 

Unlike New Zealand, Australia allowed restaurants to offer takeaway meals as customers were banned from dining in from the end of March. 

Only Victoria has resorted to Kiwi-style restrictions but even under Labor's Stage Four lockdowns, Premier Daniel Andrews' government is still allowing restaurants to offer takeaway food. 

During the June quarter, the UK's economy contracted by 20.4 per cent as French GDP shrunk by 13.8 per cent while Canada's economy plunged by 11.5 per cent.

Jacinda Ardern's Labour Party is the favourite to be re-elected on October 17 despite the recession.

During New Zealand's last recession, Labour's last prime minister Helen Clark lost the November 2008 election - but she had already been in power for nine years.