This could mean that the country is nearly six months into a recession
Ahead of Stats NZ’s release of GDP figures on Thursday, all five major banks are now predicting that the economy shrank in the final months of 2022.
If proven correct, the New Zealand economy could already be nearly six months into a recession that the Reserve Bank had instead set for this year.
Last month, the central bank estimated a 0.7% growth in the quarterly GDP in the three months to December, down from the very strong growth of 2% in the previous quarter.
But ANZ and Kiwibank are both expecting Stats NZ to instead report a 0.3% decline in economic activity, BNZ and Westpac are both predicting a 0.2% fall, while ASB is forecasting a 0.5% drop, Stuff reported.
Miles Workman, ANZ senior economist, said that with international tourist numbers still around 32% lower than their pre-pandemic levels in December and with house prices on the downward trend, it “simply wouldn’t pass the sniff test” to see strong seasonally adjusted economic activity during the quarter.
Mary Jo Vergara, Kiwibank senior economist, said a range of economic indicators – from estimates of building work to manufacturing sales and retail trade figures – indicated weak activity.
The NZ economy is projected by RBNZ to have entered a shallow recession in January.
But as a recession is defined in New Zealand as two consecutive quarters of GDP decline, it would have to wait until Stats NZ releases the June quarter GDP on Sept. 21 for the confirmation.
On the other hand, if Stats NZ reports a decline in the GDP in the December quarter, a recession could be confirmed as soon as June 15.
BNZ had predicted a GDP growth of 0.3% in the December quarter, before it revised its forecast.
Nathaniel Keall, ASB economist, expected Cyclone Gabrielle would have a “highly uneven” impact on the economy but that post-cyclone recovery would boost growth in the short term due to ongoing repairs and as consumers replace damaged possessions, Stuff reported.
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