Should the economy fail to expand in the current cyclone-hit quarter, as some economists forecast, it would have entered a recession six months earlier than the Reserve Bank predicted.
| New Zealand’s economy contracted more than expected in the final three months of 2022, putting it on the brink of recession and prompting investors to lower bets on the pace of further interest-rate increases.
Teachers and supporters at a rally outside parliament in Wellington on Thursday. New Zealand is on the brink of recession., as some economists forecast, it would have entered a recession six months earlier than the Reserve Bank of New Zealand predicted. “The crucial thing for the RBNZ is that the starting point for the economy is substantially less stretched than they thought,” said Michael Gordon, acting New Zealand chief economist at Westpac. “And that matters for how much of a slowdown is needed to bring inflation back under control.”The $NZ fell as low as US61.40¢ in Wellington after the release, from US61.86¢ beforehand, before paring losses. Bond yields also slid.
The earlier slump in growth adds to signs that higher borrowing costs are starting to curb consumption and could slow inflation faster than the central bank expects.
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