New Zealand has slipped into recession once again, as two natural disasters followed on the back of crippling Covid lockdowns that devastated the country’s economy.
On Thursday, Stats NZ released data showing the Kiwi economy contracted by 0.1 percent in the first quarter of 2023.
The reverse follows a 0.7 percent slump in the last quarter of 2022, fitting the standard definition of recession: consecutive quarters of contraction in economic growth.
NZ was hit by two major disasters in the first three months of the year.
Auckland experienced major flooding as Cyclone Gabrielle ravaged large parts of the country, destroying infrastructure, homes and productive land.
New Zealand is in recession after another quarter of negative economic growth
More than a dozen people were killed, and Treasury estimated a cleanup bill of $NZ9-14.5 billion ($A8.2-13.2 billion).
The recession is likely to have political ramifications with Labor seeking a third term on October 14, now under new leader Chris Hipkens following the sudden resignation of Jacinda Ardern.
Like Australia, the Reserve Bank of New Zealand has been trying to combat runaway inflation by raising official interest rates, which have risen rapidly from 0.25 percent to 5.5 percent over the past 20 months.
The RBNZ has relentlessly hiked rates at its past 12 meetings, including an unprecedented triple increase of 75 basis points last November.
Headline inflation was last measured at 6.7 percent in the first quarter of 2023, down from a peak of 7.3 percent in the second quarter of 2022.
The GDP figure in the first quarter of 2023 contradicted official forecasts, with both the Reserve Bank and Treasury predicting modest growth of 0.3 percent.
Economists were divided on their forecasts, with major banks tipping some results.
A poll of 18 economists conducted by Reuters produced an average forecast of a contraction of 0.1 percent.
The news from the Tasman comes after a leading entrepreneur warned that Australia is on the brink of financial collapse due to a housing bubble similar to the one that crippled the US economy in 2008.
Matt Barrie, founder and CEO of staffing agency Freelancer.com, outlined a terrifying list of factors that he claimed would soon plunge Australia into economic collapse.
He said rising inflation, resulting rate hikes and rising mortgage payments were all symptoms of impending financial disaster.
The recession will have political ramifications as Labor seeks a third term on Oct. 14 (Photo: New Zealand Prime Minister Chris Hipkins)
Matt Barrie, founder and CEO of staffing agency Freelancer.com, outlined a terrifying list of factors he claimed would soon plunge Australia into economic collapse
Mr Barrie compared Australia’s current economic climate to the global financial crisis triggered by the 2008 housing collapse in America, when reckless lending and risk-taking by banks drove house prices up and then inevitably crashed.
“It’s exactly the global financial crisis that we’ve seen in America and is playing out here in Australia today,” he told Australian online broadcaster ADH TV.
Mr Barrie, who rose to national prominence for opposing Sydney’s exclusion laws in 2016, said every Australian realizes that ‘something is terribly wrong in this country’ as mortgages, bills and the cost of living skyrocket, much higher then officially recognised.
He said Australian workers are being forced to take out huge mortgages because of extraordinary house prices, which are being pushed higher and higher by importing more and more people to support demand.
“The only reason house prices are rising is because we’re bringing more people into the country,” he added.
“We have brought 620,000 students to this country, and everyone knows they are not students, but cheap labor who have been deployed to support GDP and work in 7-11 or drive an Uber.
“It really is late-stage desperation in a Ponzi scheme. The housing market, which has been rising relentlessly for 60 years, has led to a Ponzi out of all proportion – it is the housing bubble of all bubbles.’