An economic commentator expects New Zealand to enter a recession over the next year, with inflation falling as a result.
Former Reserve Bank economist Michael Reddell was asked on Breakfast this morning for his predictions ahead of the latest Gross Domestic Product (GDP) figures, set to be released today.
"Really, it's anyone's guess," he said. "Some of the forecasters are slightly negative, some are slightly positive."
But "we're going backwards" as individuals due to population growth, Reddell added, explaining an approximately consistent GDP was being "spread" over more people. It's "most likely" New Zealand will enter a recession, he said.
"If you look at the official forecasts, that's certainly the case.
"I don't think, at the moment, the best guess is a particularly severe recession – but we've seen the unemployment rate rising already, and it's generally expected that it will go up to nearer 5% during the course of next year.
"In any reasonable definition, that's the economy going backwards. Another word for that is a recession."
A potential recession would drive inflation down, he said.
"We need to drive that inflation out of the system to provide a better economic backdrop for all of us.
"It's a tough adjustment for people, particularly people who lose their jobs in the course of that," he acknowledged.
"And it's partly the flip side of the fact that we had a badly overheated economy for the last couple of years."
Labour MP Kieran McAnulty and National MP Chris Bishop joined Breakfast later in the show to discuss the state of the economy.
Asked about the GDP figures, McAnulty said: "I don't think they'll be stellar but, in the context of the world economy at the moment, I think they'll square up pretty well against other [countries].
"It's tough times, but we did start to see things turn a corner heading up to the election.
"Inflation is starting to come down, GDP's starting to pick up after that blip around the cyclone," he added. "I think it should be positive news, I don't think we'll be crowing, I hope the Government doesn't try to crack into it too much. It is what it is now.
"They've got a plan, they're gonna go at it, but it's a reflection of how things were at the time of the election."
Bishop said he wouldn't try to guess what the numbers would be.
"These are backward-looking numbers obviously and I'm not going to make a projection, I haven't had a heads-up on them.
"They're confidential numbers, they are what they are," he said. "But the key point is what we do going forward.
"We've got a real plan to grow the economy and get more jobs and incomes into this place."
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