from AFR / BloombergNZ faces recession after economy contracts...

from AFR / Bloomberg

NZ faces recession after economy contracts in Q2

Bloomberg

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New Zealand faces another recession after the economy contracted in the second quarter, albeit less than economists and the central bank expected.

Gross domestic product declined 0.2 per cent from the previous quarter when it gained a revised 0.1 per cent, Statistics New Zealand said Thursday in Wellington. Economists expected a 0.4 per cent contraction while the Reserve Bank projected a 0.5 per cent drop.

The economy’s prolonged slump and signs that inflation is back under control prompted the RBNZ to start its easing cycle last month – much sooner than it had previously indicated. The central bank expects the economy to shrink again in the current quarter, which would be its second recession in less than two years.

“The economy is weak, as to be expected after a prolonged period of restrictive monetary policy,” said Kim Mundy, senior economist at ASB Bank in Auckland. “Ongoing headwinds, including our expectation for further weakening in the labour market, suggest we are unlikely to see a rapid turnaround in the economy.”

The New Zealand dollar edged lower after the report, buying 62.09 US cents at 11.25am in Wellington.