The New Zealand economy has slipped into recession after the country’s central bank aggressively raised interest rates to a 14-year high, according to quarterly figures released by the statistics department on Thursday.
Stats NZ said the GDP fell 0.1 per cent in the March 2023 quarter, following a 0.7 per cent fall in the December 2022 quarter, Xinhua news agency reported.
The second consecutive quarter of negative economic growth signals the start of an economic recession.
The Reserve Bank of New Zealand (RBNZ) has increased the cost of borrowing sharply since October 2021.
Ot was one of the first countries to start raising rates in the wake of the Covid-19 pandemic and has outpaced the US Federal Reserve.
Last month, the RBNZ increased its main interest rate to 5.5 per cent.
“Today’s outcome fits the definition of a technical recession by the barest of margins,” Finance Minister Grant Robertson said on Thursday, adding the economy was affected by the second-largest natural disaster to hit New Zealand in the first quarter.
This result reflects the impact of the Auckland floods and cyclone Gabrielle, with estimates of hundreds of millions of dollars of lost production and activity across agriculture, forestry, fishing, transport and manufacturing due to the extensive flooding, Robertson said.
The Minister looks to export growth, the tourism rebound, returning international students, migration inflows, and investment in the recovery to handle the challenging times.
The two consecutive quarter declines follow growth in the second and third quarters of 2022, Stats NZ’s economic and environmental insights general manager Jason Attewell said.
Over half of the industries saw declining figures in the last quarter.
Business services were the biggest downward driver, down 3.5 per cent, which was partly offset by a 2.7 per cent increase in information media and telecommunications in the first quarter, Attewell said.
“Management consulting, advertising, scientific and engineering design services drove the fall in business services,” he said, adding the March 2023 quarter included the initial impacts of Cyclones Hale and Gabrielle and teachers’ strikes.
The adverse weather events caused by the cyclones contributed to falls in horticulture and transport support services, as well as disrupted education services, he said.
“Fewer teaching days led to falls in primary and secondary education services,” Attewell said.
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