Buildings in Auckland, New Zealand, Monday, May 22, 2023.
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New Zealand’s gross domestic product fell 0.1% in the first quarter, according to government data released on Thursday, as its central bank embarked on one of the world’s most aggressive rate hike cycles.
Wellington’s latest figures mark a technical recession, after Reported a revised 0.7% decline In the last quarter of 2022.
A technical recession is defined as two consecutive quarters of contraction.
Compared with a year ago, the economy grew by 2.9% in the first quarter. Economists polled by Reuters had forecast New Zealand contracting 0.1% quarter-on-quarter and growing 2.6% year-on-year.
this new zealand dollar It was down 0.23% against the dollar after the release. Equities were little changed – the S&P/NZX 50 rose 0.144%.
At its May meeting, the Reserve Bank of New Zealand raised its benchmark interest rate to a 14-year high, with a 25 basis point hike lifting its Official cash rate cut to 5.5%.
“There was a mix of results at the industry level in the March 2023 quarter, with more than half of industries down for the quarter,” said Jason Attewell, managing director of New Zealand Economic and Environmental Insights.
The contraction was driven by a 3.5 percent decline in business services production and a 2.2 percent decline in transportation, gateway and warehousing.
During the quarter, New Zealand also experienced the “initial impact” of cyclones Hale and Gabriel and teachers’ strikes, the data agency said.
“Severe weather events from the hurricane resulted in a decline in horticultural and transportation support services, as well as disruptions in education services,” Attewell said.
Production in the information media, telecommunications and real estate sectors increased by 2.7 percent and 0.7 percent, respectively.
New Zealand’s trade also contracted: export prices fell 6.9% and import prices fell 5.4%.
“Policy induced” slowdown
“The New Zealand economy is in the midst of a necessary policy-induced slowdown following a strong post-pandemic recovery,” the IMF said in its mission statement on Wednesday ahead of the GDP release.
The IMF also warned the central bank against turning to monetary policy easing, adding that it should still leave the door open for more rate hikes in the future.
“There is little room to lower the OCR in the longer term as non-tradable inflation persists,” the IMF wrote.
“A rekindling of demand, including due to insufficient fiscal consolidation, and inflation stagnating above target, will require further tightening of monetary policy,” it said.