But that doesn't mean a recession isn’t coming, economists say
New Zealand may evade another decline in economic growth in the first quarter of 2023, thus escaping a technical recession, ANZ economists said.
According to the bank’s latest Truckometer, its light traffic, which was an indication of consumer spending, rose 4.6% month-on-month in March, the highest increase in seven months, while its heavy traffic index, which pointed to economic production, grew 2.7%.
Sharon Zollner (pictured above), ANZ chief economist, said the figures had to be treated with some caution considering the disruption of lockdowns as well as the impact of recent wild weather events, including Cyclone Gabrielle, RNZ reported.
“Overall, the data can be characterised as consistent with consumer spending cooling as RBNZ [the Reserve Bank of New Zealand] rate hikes continue to bite,” Zollner said.
The ANZ economist said the 1.1% in the heavy traffic index over the March quarter suggested “an upside risk to our expectation that the economy eked out modest growth of 0.2% quarter on quarter following the weakness in the fourth quarter.”
The economy contracted by a shock 0.6% in the three months ended December.
“So far, heavy traffic is not showing anything like the sharp declines seen in the global financial crisis,” Zollner said.
Zollner said if the economy slumped in the first quarter, it would most likely be “noise” around supply side and weather impacts, RNZ reported.
“That doesn’t mean a recession isn’t coming...” Zollner said. “We are forecasting the ‘real’ recession to start in the third quarter of this year.”
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