Reserve bank had taken steps to engineer a ‘shallow recession’ in response to high inflation but shrinkage arrives early
New Zealand’s economy is shrinking, with gross domestic product down 0.6% last quarter, amid speculation a recession may be approaching.
Responding to the figures, the finance minister, Grant Robertson, said: “2023 was always going to be a challenging year. The global economy is volatile and still recovering from Covid impacts. Since late 2022, the reserve bank has been taking steps to engineer a “shallow recession” in response to high inflation rates, and has successively raised the official cash rate, making borrowing more expensive in an attempt to curb household spending.
Opposition finance spokesperson Nicola Willis said the numbers indicated a “stalling economy” and “yet more bad news for New Zealanders alreadyAccording to Stats NZ, shrinking activity in the manufacturing industry was the biggest driver of the decrease, with the sector down 1.9%. Overall, nine of the 16 industries tracked by Stats NZ were down, with particular drops in retail, accommodation, arts, recreation, transport, postal services, and warehousing.
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