New Zealand's economy has fallen into a recession, according to official data released on Thursday. This amidst, a damaging cyclone fuelling a widespread downturn just months before a national election. Recession is announced when a country's economy contracts for two consecutive quarters.
Stats NZ signalled the economy had contracted 0.1% in the first quarter of 2023, after a fall of 0.7% at the end of 2022. While the GDP matched analysts expectations, it was well below the Reserve Bank of New Zealand's forecast of 0.3%. Following the release of data, the New Zealand dollar slipped 0.2%. As per Economic Times, New Zealand central bank is now expected to stop hiking the interest rates.
Four months before the country goes to the polls, finance minister Grant Robertson admitted that entering recession was "not a surprise".
"We know 2023 is a challenging year as global growth slows, inflation has stayed higher for longer and the impacts of North Island weather events continue to disrupt households and businesses," he added.
As per AFP, January flooding in Auckland and destruction caused by Cyclone Gabrielle in February both weighed on the economy. The government estimates it will cost up to NZ$15 million (US$9 mn) to clean up the damage caused by the extreme weather.
This is New Zealand's first recession since 2020, when the pandemic shuttered borders and choked exports. The country's economy is now at 6.7%. Agriculture, manufacturing, transport and services too declined.