New Zealand Slips Into Recession For The Second Time

According to official data released on Thursday, March 21, New Zealand is experiencing its second recession in less than a year and a half.

In late 2023, the economy shrank by 0.1 percent, after contracting by 0.3 percent in the preceding quarter.

This decline comes after a comparable one that occurred in late 2022–early 2023.

The economy has been severely strained by a number of factors, including unfavorable weather and attempts to control inflation, which have resulted in two consecutive quarters of contraction.

The effects of the recession are being felt everywhere, as businesses in a variety of industries are slashing expenses and deferring projects, while consumers are become more frugal.

Kiwibank's chief economist, Jarrod Kerr, expressed disapproval of the central bank's strategy by saying, “They lifted interest rates with a very heavy hand... We've seen a contraction on the back of it.”

In an attempt to rein in skyrocketing prices, the Reserve Bank of New Zealand has raised its target interest rate twelve times since mid-2021, from 0.25 percent to the current rate of 5.5 percent.

Furthermore, unfavorable meteorological occurrences, such as Cyclone Gabrielle and other extreme weather in the northern region of the nation, have exacerbated economic difficulties.

The economy is still sluggish, despite an increase in immigration of over 130,000 individuals to New Zealand last year, highlighting the depth of the depression.

The collapse of well-known companies like Godfreys, which announced it was closing all of its stores in Australia and New Zealand, affecting over 600 jobs, is a clear indication of the economic burden.