New Zealand economy performs at weakest in decades
A report from Kiwibank Economics highlights that the latest six-month recession, excluding the Covid-19 pandemic, is the country’s worst economic performance since 1991. broader economic challenges.
“Yes, a 1% drop in economic activity is significant. And it’s much weaker than anyone expected,” Kiwibank’s report said.
The bank said the decline was likely to be offset by upward revisions to previous growth data and expected relief from a 1% rate cut this quarter.
New Zealand dollar hits new lows
The New Zealand dollar fell sharply against the U.S. dollar, trading at $0.5626 in the afternoon, down 1.8% from the previous trading day. The unexpected contraction caught traders off guard and further dampened market sentiment.
The government has defended its economic policies during the downturn, emphasizing measures aimed at economic growth and fiscal responsibility. ,” Government finance minister Nicola Willis attributed the contraction to high inflation and the impact of the Reserve Bank’s recession-inducing policies to control inflation.
“The decline reflects the impact of high inflation on the economy. This has led the Reserve Bank to engineer a recession that stifles economic growth,” Willis said. She remains optimistic about future growth, predicting that the economy will recover next quarter and growth will be stronger in 2025.
The opposition Labor Party criticized the government’s approach, accusing Finance Minister Willis of exacerbating the recession.
“Nicola Willis’s cuts and austerity policies have exacerbated the recession,” Labor finance spokesperson Barbara Edmonds said. “Nicola has been unable to do any creative accounting to make these GDP figures Better.”
Impact on workers raises concerns
The economic contraction has heightened concerns about its impact on workers and job security. New Zealand Council of Trade Unions economist Craig Renney issued a stark warning about the impact on the labor market.
“This is not a wake-up call to the government; this is an alarm,” Rainey said. “The economic situation is worse than we thought, which means workers will face even more difficulties heading into Christmas.”
The full impact of the recession has yet to be felt, but experts and stakeholders will continue to monitor developments closely.