New Zealand is Recession
Gross domestic product contracted for two consecutive quarters
New Zealand’s economy is slipping into an unexpected recession: for Auckland, it is the worst situation since the 1991 recession, with the exception of the pandemic period.
GDP in the third quarter fell 1% from the previous period, while it was forecast to contract by 0.25% – news that had an immediate impact on the New Zealand dollar, which hit its lowest level in more than two years at 0.5614 against the US dollar. Manufacturing fell 1.5% (estimate -0.4%), and GDP per capita fell 2.1%, also due to population growth of 1.2%.
Now there is betting that the Reserve Bank of New Zealand will cut interest rates decisively again in the coming months after having already acted on this by cutting 125 basis points and bringing the rate to 4.25%.
The Central Bank itself was in the dock because of the disastrous state of the economy. “The decline reflects the impact of high inflation on the economy. This led to the Reserve Bank triggering a recession that stifled economic growth,” Finance Minister Nicola Willis explained, as reported by Reuters.
