Bank economists are split in their forecasts as today's GDP figures release will reveal whether New Zealand's economy is technically in a recession.
Quarter 1 figures for the period between January and March will be released later this morning.
Following last quarter's 0.6% fall in GDP, another decline in Q1 this year would mean the country is technically in a recession.
A "technical recession" is defined when there are two successive quarters of negative growth in GDP, meaning six months when the economy is shrinking rather than growing.
Speaking to Breakfast, ANZ chief economist Sharon Zollner said it was still "touch and go" as the bank picked a small iota of growth for the period at the beginning of the year.
"We're picking an increase of 0.2%, which isn't that far from zero, and zero is certainly within the realms of possibility," she said.
"We've got demand moving in the economy, but we've got a lot going on on the supply side of things too and still including some Covid echoes, for example, some labour shortages. There's a range of estimates out there around either side of zero."
The ANZ economist said the data was "noisy", which meant economists had a harder time when trying to pick out when a recession officially started.
Zollner said: "The Treasury forecast looked a little more optimistic than ours, for example.
"The Reserve Bank's picking 0.3% for this quarter, but they are picking a recession later in the year, which is sort of what we're picking at least on a per-capita basis.
"We've got such strong population growth at the moment that that's another variable that's gonna affect the numbers."
ASB's economists have said they are forecasting growth of only 0.1%. In contrast, Westpac economists are picking a fall of 0.4% — a generally more pessimistic forecast.
"We estimate that GDP fell by 0.4% in the December quarter. This would be the second straight quarterly decline, and would be weaker than market and Reserve Bank forecasts," the bank's economists wrote.
"There's a high degree of uncertainty around the quarterly result, as Covid-19 has significantly disrupted the usual seasonal patterns in the data."
Meanwhile, BNZ economists suggested there would be a 0.2% decline but emphasised the exact number was less important than the trend of the economy.
"Even if Q1 GDP averts this statistical fate, it will be hard to deny the economy is, more generally, on a cooling trajectory. One that will take heat out of inflation. That's the point we'd want to emphasise, not the finer points of quarterly GDP measurement."
Broken down by sector, Zollner told Breakfast that tourism had seen strong performance over the summer and would likely be a positive story in today's figures.
"We've had about 70% of normal, pre-Covid numbers, which has been a pretty decent bounce, actually. The summer is obviously a key time for tourism, so that should be a feature of these numbers."
The economist said how the sector did in the coming months would ultimately be determined by global factors, like how much tourists would be willing to spend in order to come to Aotearoa.
"The forward-looking bookings are looking quite good for the next season. But it is a bit of a matter of wait and see."
Stats NZ will release the March quarter GDP figures later today at 10.45am.
High inflation rates are hitting household budgets hard. (Source: 1News)
In the past year, the Reserve Bank has been battling high inflation with rate hikes which economists have said will continue to impact the economy into 2024.
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