New Zealand GDP drops by 0.2 per cent
New Zealand’s economy contracted marginally in the first quarter of the year, with GDP falling by 0.2 per cent, raising fears of a fresh recession.
The result is below banking industry expectations of a flat result and well below the Reserve Bank’s forecast of an 0.7 per cent rise.
It also confirms New Zealand’s rollercoaster economic response to COVID-19, with GDP dropping in five of the last nine quarters.
The latest figures correlate with the arrival of Omicron in New Zealand, which produced widespread staff shortages and supply chain disruptions as many Kiwis caught COVID-19.
Stats NZ said primary industries drove the dip, falling 1.2 per cent.
“We saw lower output in the food, beverage, and tobacco manufacturing sub-industry; and the agriculture, forestry, and fishing industry,” Stats NZ spokeswoman Ruvani Ratnayake said.
“These declines corresponded to falls in related exports categories, including dairy products; meat products; agriculture and fishing products; and other food, beverage and tobacco products.”
A Delta outbreak saw GDP slump in Q3 2021 by 3.6 per cent, followed by a Q4 bounce of 3.0 per cent.
A second successive fall would mean New Zealand suffers its second recession of the pandemic.
The Reserve Bank is already well advanced in putting the brakes on the Kiwi economy, raising interest rates in response to runaway inflation.
New Zealand’s central bank has lifted the official cash rate at its last five meetings from an emergency setting of 0.25 per cent to 2.0 per cent.
CPI inflation is currently running at 6.9 per cent in New Zealand, a 32-year high, but below the OECD average.