GDP figures expected to show NZ in recession

Monday, 16 December 2024

The latest GDP figures will show the state of the economy as the Reserve Bank started to lower interest rates from their 5.5% high.

Figures due out on Thursday are likely to confirm the economy has been in recession.

However, Stats NZ may “cancel” the shallow recession that was believed to have taken place during the second half of last year, when the election was held.

ANZ, ASB and Westpac are all forecasting Stats NZ will report the country’s gross domestic product (GDP) shrank 0.4% during the three months to the end of September, after a 0.2% decline in the June quarter.

That would be a sharper decline than the 0.2% drop forecast by the Reserve Bank.

The financial pinch felt in the 3 months to June was reflected in Stats NZ's economic update with Gross Domestic Product falling by 0.2%, ThreeNews reports.

Serving as a reminder that the estimates are only that, Stats NZ announced last month that it would be upgrading its estimate of the growth that occurred in the two years to March, due to better data.

It now appears possible it will assess that the economy grew rather than shrank in the second half of last year – though that won’t be confirmed until it updates its past quarterly figures on Thursday.

The fresh economic data is likely to be overshadowed by forecasts that will be released by the Treasury on Tuesday that will downgrade its expectations for economic growth.

BNZ research head Stephen Toplis said the cancellation of any previous recessions would mainly be of interest to economic geeks.

While a recession is commonly defined as two consecutive quarters of GDP decline, Toplis said that wasn’t how BNZ looked at it.

“Our view is that the economy has been in recession for about 18 months.

“It's going to be mid-2025 before we get back to the same level of economic activity that we were at in 2022, so as far as we're concerned, that is the length of the recession.”