New Zealand has slipped into its second recession in less than 18 months, according to government figures. The country’s gross domestic product (GDP) shrank by 0.1 percent during the October-December period, following a 0.3 percent contraction in the third quarter, as reported by New Zealand’s official statistics agency on Thursday.
On a per capita basis, the economy fared even worse, with GDP shrinking 0.7 in the last quarter of 2023, according to government figures. Economists traditionally define a recession as two consecutive quarters of negative growth.
The recession comes as the Reserve Bank of New Zealand has aggressively raised interest rates to tame some of the highest inflation in the developed world, putting a brake on economic activity. The downturn also comes despite record inward migration to New Zealand that saw more than 133,000 net arrivals over the past year.
New Zealand Finance Minister Nicola Willis, a member of the centre-right National Party, blamed the recession on the “big spending, big taxing” policies of the former Labour Party government, which lost power in general elections in October. Labour’s finance spokesperson Barbara Edmonds accused the government of failing to produce a single policy to help New Zealanders deal with the cost of living.
Willis said, “It is concerning that we are in recession even despite our rapidly growing population. This simply reinforces that our approach to strengthening and growing the economy is the right one. The good news is that inflation is tracking in the right direction.” Edmonds criticized the government, stating, “Instead of policies to make childcare more affordable, making most prescriptions free, or half-price public transport, this Government has just spent nearly $3bn on landlords and is still planning tax cuts that won’t benefit working people in the way they promised.”
The political parties in New Zealand are trading blame for the economic slump that follows aggressive interest rate hikes to tame inflation. The recession is a significant concern for the country’s economy, and the government’s policies are under scrutiny for their impact on the cost of living and economic growth.
