New Zealand slips into its second recession in 18 months as economy contracts

New Zealand has entered its second recession in 18 months after the latest round of GDP figures confirmed its economy contracted in the last quarter of 2023

New Zealand Recession (Copyright 2020 The Associated Press. All rights reserved)

New Zealand has entered its second recession in 18 months after the latest round of GDP figures confirmed its economy contracted in the last quarter of 2023.

The country's economy shrank by 0.1% in the quarter to December, and 0.7% in per capita terms, the New Zealand's official statistics agency, Stats NZ, announced on Thursday.

The latest slip follows a 0.3% contraction in the September quarter, which fulfils the technical definition of a recession. It is New Zealand’s second recession event in the past 18 months.

Stats NZ said the country New Zealand had returned negative GDP figures in four of the last five quarters, and had a stagnant annual growth rate of just 0.6%.

The slump was largely expected with New Zealand's central bank forecasting a flat figure, while bank economists suggested a range of results between a narrow contraction and fractional growth.

The data made for worse reading in a per capita context with the last five quarters all retreating by an average of 0.8%.

Helping to prop up the south Pacific island nation’s economy has been a record migration intake, which hit a record peak of 141,000 new arrivals in 2023.

Without that population growth stimulating an otherwise stagnant economy, New Zealand’s economic position would be slipping at an even faster rate.

Regulation Minister David Seymour said the current economic conditions would lead to cuts in the country's forthcoming budget, including cutting the number of government workers.

“We’re in a slump, but that won’t be news to you, because you’ve already been living in it,” Seymour said.