New Zealand economy slips into recession

WELLINGTON - New Zealand's economy had the second consecutive quarter of contraction in the fourth quarter of 2023, which met the technical definition of a recession.

New Zealand's gross domestic product (GDP) fell 0.1 percent in the December 2023 quarter, following a 0.3 percent fall in the September 2023 quarter, according to the statistics department Stats NZ on Thursday.

It shows New Zealand's economy "slowed earlier and at a faster rate than previously thought," said Finance Minister Nicola Willis.

Weak consumer spending and wholesale trade drove the economic contraction, according to Stats NZ.

Wholesale trade was the largest downwards driver this quarter, led by falls in grocery and liquor wholesaling; and machinery and equipment wholesaling, said Ruvani Ratnayake, Stats NZ national accounts industry and production senior manager.

Retail trade activity also fell, driven by furniture, electrical, and hardware retailing, as well as food and beverage services, Ratnayake said, adding that eight out of 16 industries increased, driven by rental, hiring, real estate services, public administration, safety and defense.

Increased activity associated with the New Zealand General Election contributed to growth in public administration, safety, and defense, said Ratnayake.

Household spending grew 0.5 percent, led by a rise in spending on services, primarily transport, he said, adding that the GDP per capita decreased by 0.7 percent in the December 2023 quarter, driven by higher net migration and lower real gross national disposable income.

Willis said high inflation is now being beaten back by high interest rates, but this has a crushing flow-on impact on growth.

"It is concerning that we are in recession even despite our rapidly growing population," she said, adding that the good news is that inflation is tracking in the right direction, with the price of fresh fruit and produce dropping by 9.3 percent.

According to the New Zealand Institute of Economic Research, New Zealand's low economic growth rate is likely to continue until early 2025, but that in the long term, population growth led by immigration will support a recovery in economic activities. - XINHUA