- Economists polled by Portal expected New Zealand to post a quarter-on-quarter decline of 0.1% qoq and growth of 2.6% yoy.
- At its May meeting, the Reserve Bank of New Zealand raised its policy rate to a 14-year high, with the 25 basis point hike taking its official policy rate to 5.5%.
Buildings in Auckland, New Zealand, on Monday May 22, 2023.
Bloomberg | Bloomberg | Getty Images
New Zealand’s gross domestic product fell 0.1% in the first quarter, according to government data released on Thursday, as the central bank embarked on one of the most aggressive rate-hiking cycles in the world.
The latest data from Wellington marks a technical recession for the economy after reporting a revised 0.7% contraction for the final quarter of 2022.
A technical recession is defined as two consecutive quarters of contraction.
Compared to the previous year, the economy grew by 2.9% in the first quarter. Economists polled by Portal expected New Zealand to fall 0.1% qoq and grow 2.6% yoy.
At its May meeting, the Reserve Bank of New Zealand raised its policy rate to a 14-year high, with the 25 basis point hike taking its official policy rate to 5.5%.
Refinitiv, Statistics New Zealand
“New Zealand’s economy is in the midst of a necessary, policy-driven slowdown after the strong post-pandemic recovery,” the International Monetary Fund said in a mission statement ahead of the GDP release on Wednesday.
The IMF also warned that the central bank would move towards monetary easing, adding that it should leave the door open for further rate hikes in the future.
“As inflation in non-tradable goods persists, there is little scope to lower OCR for an extended period,” the IMF wrote.
“A revival of demand, also due to insufficient fiscal consolidation, and inflation stalling above target would require further tightening of monetary policy,” it said.
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