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New Zealand Enters the Brink of Recession

New Zealand Enters the Brink of Recession, New Zealand’s economy finally entered the brink of recession in the fourth quarter of 2023. This is due to weak consumer spending and wholesale trade.

Stats NZ data shows that seasonally adjusted Gross Domestic Product (GDP) fell 0.1% in the three months ending December 2023, bringing the annual growth rate to 0.6%.

The report then signaled a second straight quarter of contraction, following a 0.3% decline in the previous quarter that met the technical definition of a recession. Then, GDP per capita also decreased by 0.7%, driven by net migration and real gross national disposable income decreased by 1.4%.

Retail trade in the Kiwi country is also known to have declined, mainly driven by retail furniture, electricity, hardware, food and drinks. However, 8 out of 16 industries experienced an increase, such as rental, recruiting, real estate, public administration, safety and defense.

ASB economist Nathaniel Keall said that a prolonged manufacturing recession was affecting the economy, along with weaker retail and wholesale activity.

Previously he estimated a contraction of 0.2%. Then, as he has consistently emphasized, the economic slowdown occurred at a time when population growth in New Zealand was proving to be very strong by historical standards.

New Zealand Enters the Brink of Recession, Key GDP figures are then seen as embellishing the economic picture and hiding underlying weaknesses.

Keall believes that with the economy weaker than expected, New Zealand’s central bank (Reserve Bank of New Zealand/RBNZ) may be more inclined to lower the official cash rate (OCR) sooner than signaled in mid-2025.

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