Signs of Recession have appeared in New Zealand
2022.12.21 01:58
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Signs of Recession have appeared in New Zealand
Budrigannews.com – In recent weeks, confidence in New Zealand has fallen, raising concerns that the country may be heading toward a deeper recession than most predicted.
Following the Westpac quarterly confidence survey on Monday, which also recorded its lowest level since it began in 1988, the December ANZ Consumer Confidence survey dropped to its lowest level since it began in 2004. It was released earlier on Wednesday. Additionally, the ANZ Business Confidence survey fell to a record low.
In a note, Bank of New Zealand Senior Economist Doug Steel stated, “There can be no doubting the sombre economic mood across the nation at present.”
“All of this points to a deeper recession than some people would like. There is no doubt that a sharp rise in interest rates is a component of the mix,” Steel added.
In an effort to contain inflation, which is just below three-decade highs, the New Zealand central bank has initiated an aggressive cycle of tightening. Rates are currently 400 basis points higher than they were in October 2021. It and the Treasury department of New Zealand predict that the country will enter a shallow recession in the second quarter of 2023.
Second from last quarter financial development showed that the country’s economy keeps on holding up well, acquiring 2.0%.
In a note, Westpac Senior Economist Satish Ranchhod stated that the combination of falling consumer and business confidence strengthens expectations for an economic downturn.
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“We’re still looking at a protracted period of weak demand over the coming 18 months, even though that recession isn’t expected to be deep. And as a result, unemployment will rise,” Ranchhod continued.
He stated that this slowdown was necessary to ease inflationary pressures, but the survey of business confidence did not indicate that cost pressures were decreasing.
