Buildings in Auckland, New Zealand, on Monday, Could 22, 2023.
Bloomberg | Bloomberg | Getty Photographs
New Zealand’s gross home product fell 0.1% within the first quarter, based on authorities information printed Thursday, as its central financial institution launched into one of the crucial aggressive fee hike cycles on the earth.
The newest information from Wellington marks a technical recession for the financial system, after reporting a revised 0.7% decline within the remaining quarter of 2022.
A technical recession is outlined as two consecutive quarters of contraction.
In contrast with a yr in the past, the financial system grew 2.9% within the first quarter. Economists surveyed by Reuters anticipated New Zealand to mark a contraction of 0.1% quarter on quarter and development of two.6% yr on yr.
In its Could assembly, the Reserve Financial institution of New Zealand raised its benchmark fee to a 14-year excessive, with the 25-basis-point hike lifting its official money fee to five.5%.
“New Zealand’s financial system is within the midst of a needed, policy-induced slowdown following the sturdy post-pandemic restoration,” the Worldwide Financial Fund mentioned in a Wednesday mission assertion forward of the GDP launch.
The IMF additionally warned in opposition to the central financial institution turning to financial coverage easing measures, including that it ought to nonetheless depart the door open for extra fee hikes forward.
“As non-tradable inflation persists, there’s little scope to decrease the OCR for a protracted interval,” the IMF wrote.
“A reignition of demand, together with on account of inadequate fiscal consolidation, and a stalling of inflation above goal would name for additional tightening of financial coverage,” it mentioned.
This can be a breaking information story. Please test again for updates.
