New Zealand is in recession with gross domestic product (GDP) shrinking for the second quarter in a row, according to latest figures by Stats NZ.
It showed GDP fell 0.1% in the December 2023 quarter, following a 0.3% decrease in the September 2023 quarter.
Wholesale trade was the largest downwards driver for the December quarter, led by falls in grocery and liquor wholesaling; and machinery and equipment wholesaling.
Retail trade activity also fell, driven by furniture, electrical, and hardware retailing; and food and beverage services.
ANZ senior economist Miles Workman points out that GDP growth on a per capita basis is almost as soft as it was following the Global Financial Crisis – “It’s tough going out there,” he says.
Overall, the GDP data shows that the Reserve Bank’s monetary tightening is working to cool the economy, he adds.
“Looking forward, we expect this slowdown to find a floor around mid-2024, at which point the million-dollar question will be whether the slowdown has been enough to return CPI inflation sustainably to target.”
Finance Minister Nicola Willis says the December quarter decline shows the economy slowed earlier and at a faster rate than previously thought.
“This is a deep hangover from the big spending, big taxing period under the previous government.
“High inflation is now being beaten back by high interest rates, but this has a crushing flow-on impact on growth.
“It is concerning that we are in recession even despite our rapidly growing population. This simply reinforces that our approach to strengthening and growing the economy is the right one,” she says.
