New Zealand’s gross domestic product fell 0.3% in the September 2023 quarter, following a revised 0.5% increase in the June 2023 quarter, according to figures released by Stats NZ today.
The revision of the past two quarters means New Zealand suffered a recession at the start of the year with two quarters of contraction.
“All goods producing industries were down this quarter, led by a fall in manufacturing,” national accounts industry and production senior manager Ruvani Ratnayake said.
All eyes were on the latest marker of where the New Zealand economy has been tracking. (Source: 1News)
The fall in manufacturing was driven by petroleum, chemical, plastic, and rubber manufacturing; and food and beverage manufacturing.
Growth in the second quarter of 2023, previously reported at 0.9%, was revised lower to 0.5% cent growth.
AAP reports the contraction would have been even bigger if it wasn't for record migration, with GDP per capita falling by 0.9 per cent in Q3 2023.
Council of Trade Unions chief economist Craig Renney said the figures should mean the Reserve Bank steps back from threatened further rate rises in 2024.
"The data should give decision makers food for thought. If growth is weakening, additional interest rate increases should be even further from consideration," Renney said.
'Further evidence'
On Wednesday, the Employers and Manufacturers Association said there was a marked increase in requests for restructuring and redundancy support from employers. This was "further evidence that the economy is rapidly slowing", EMA Head of Advocacy Alan McDonald said.
"In the year to November, demand for restructuring and redundancy support has increased by nearly 50 percent as businesses responded to the economic slowdown," he said.
"What we are hearing directly from our members is that the economy and business conditions are incredibly difficult.
"Inflationary pressures are still strong, and this is increasing the cost of doing business, while rising interest rates are dampening consumer demand and increasing debt servicing costs.
"As a result, many business owners have few options and are being forced to look at how they can reduce costs, including their staffing costs."
'Taking swift action'
Finance Minister Nicola Willis said the figures suggest economic conditions remain challenging,
"Today’s data confirms what Kiwis already know: New Zealand’s economy is under major strain," Willis said, in a statement.
"In fact, further revisions from Stats NZ confirm the economy contracted in three of the last four quarters. On a per capita basis the pain is more significant, with per capita GDP contracting 0.9 per cent in the same quarter.
"It’s evident that the impact of rising interest rates in response to rampant inflation are putting pressure on families already struggling with the cost of living. That pain isn’t just affecting families – it’s dragging down the productive economy.
"Today’s data confirms that New Zealand needs urgent economic repair. That’s why the coalition Government is moving quickly – reducing costs on business, restoring confidence in the fight to beat inflation, and eliminating wasteful spending.
Willis said the Government will pass legislation to restore the Reserve Bank’s focus on inflation this week as well as end the "Ute Tax", and unwind mandatory union-driven FPA agreements.
She said these measures were "part of our plan to restore economic confidence and begin to unwind pressures facing families and businesses".
"Overcoming these economic conditions won’t be easy. The Government will continue to take swift action to rebuild the economy in the interests of all New Zealanders," she said.
— Additional reporting from AAP
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