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The latest data from Statistics NZ has revealed that New Zealand’s gross domestic product (GDP) fell 0.1 per cent in the March 2023 quarter, which followed a decline of 0.7 per cent in the December 2022 quarter, entering Australia’s neighbours into a technical recession.
NZ Finance Minister, Grant Robertson, said the fall in GDP reflected the impact of the Auckland Anniversary floods and Cyclone Gabrielle that resulted in estimates of hundreds of millions of dollars of lost production and activity across agriculture, forestry, fishing, transport, and manufacturing.
“The result was not a surprise,” Mr Robertson said.
“We know 2023 is a challenging year as global growth slows, inflation has stayed higher for longer and the impacts of North Island weather events continue to disrupt households and businesses.
“Today’s outcome fits the definition of a technical recession by the barest of margins.
“But the resilience of the New Zealand economy, including historically low unemployment, means it will not have the impact that would normally be associated with this term.”
Speaking to the media from Rotorua on Thursday (15 June) afternoon, NZ Prime Minister Chris Hipkins echoed the sentiment shared by the Finance Minister, stating the effects on the second quarter were “largely driven by the cyclone”.
Prime Minister Hipkins stated: “It’s had a significant impact on our primary producing export industries and that’s reflected in the GDP numbers.
“This is part of a global economic downturn — New Zealand’s not immune from those things.
“But the work that we’ve done as a government to boost our exports, you see the evidence of that today in record export figures released this morning.
“That’s a sign that the strategy that we’ve got as a government — of growing our exports, growing our local industry — these are the sort of things that are going to get New Zealand through.”
RBNZ’s monetary tightening cycle
The Reserve Bank of New Zealand (RBNZ) signalled the end of its monetary policy tightening after it raised interest rates by 25 bps to 5.5 per cent on 24 May 2023.
The cash rate marked the highest in more than 14 years at 5.5 per cent, ending its most aggressive hiking cycle since 1999.
The move was as expected but surprised market economists after it signalled that it had considered keeping the cash rate on hold, which reflected global economic weakness, easing inflation pressures, signs of easing labour shortages, and a return of net inward migration.
[RELATED: RBNZ signals end of rate rises, for now]
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