Kiwis in Crisis: New Zealand Economy Plunges into Recession, Breaking 2-Year Streak
Since the pandemic closed borders and disrupted exports in 2020, New Zealand has experienced its first recession.
15 June 2023
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Jayashri Ghorpade
Official data released on Thursday reveals that New Zealand's economy, which heavily relies on agriculture, has entered into a recession.
The downturn has been exacerbated by a destructive cyclone, leading to a widespread economic decline.
This situation comes at a critical time, as it occurs just months before the country's national elections.
New Zealand's economy, which heavily relies on agriculture, has entered into a recession. A destructive cyclone has contributed to a widespread downturn just months ahead of the national elections.
According to Stats NZ, the economy experienced a contraction of 0.1 percent in the first quarter, following a decline of 0.7 percent in the final quarter of 2022.
Grant Robertson, the centre-left finance minister, acknowledged that entering a recession was "not a surprise" with just four months remaining until the general election.
Acknowledging the challenges faced in 2023 due to a global growth slowdown, prolonged higher inflation, and ongoing disruptions caused by North Island weather events, he stated, "We know that 2023 is a challenging year." The economy was impacted by the January flooding in Auckland and the destruction caused by Cyclone Gabrielle in February. In light of the extensive damage caused by these extreme weather events, the government has estimated a cost of up to NZ$15 million (US$9 million) for the cleanup efforts.
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New Zealand has entered its first recession since 2020, as the pandemic led to closed borders and reduced exports. With the economy contracting and inflation soaring to 6.7 percent, coupled with an upcoming election on October 14, the centre-right opposition swiftly attributed the blame to the government.
Opposition finance spokesperson Nicola Willis stated, "Red lights are flashing for the New Zealand economy, which has experienced shrinkage despite the ongoing surge in inflation." Declines were observed in various sectors, including agriculture, manufacturing, transport, and services.
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