New Zealand’s economy continues to plunge deeper into recession ahead of this week’s Q1 national accounts release.
Recall that Westpac last week forecasted that aggregate GDP would fall by 0.2% in the March 2024 quarter, representing the fifth decline in the previous six quarters.
If Westpac’s forecast comes to fruition, New Zealand’s GDP will have declined by 0.2% year-on-year.
Given New Zealand’s 2.5% population growth rate, this would imply a hefty 2.7% decline in per capita GDP over the year.
The flow of economic data so far in Q2 remains dire and suggests that New Zealand’s recession has continued.
The below charts from Justin Fabo at Antipodean Macro tell the tale.
In May, nominal consumer spending in New Zealand remained weak and would have declined significantly in real terms per capita:
The quarterly growth rate for domestic payment card transactions is also negative:
New Zealand’s composite PMI has collapsed, signalling outright declines in GDP:
Meanwhile, New Zealand’s job market continues to weaken, with job ads plummeting and the number of applications per job ad soaring:
The deterioration in SEEK’s employment series points to ongoing rises in New Zealand’s unemployment rate:
New Zealand has one of the tightest monetary policy settings in the world, as illustrated clearly below:
Clearly, the Reserve Bank needs to follow Canada’s lead and reduce the official cash rate to stem the economy’s bleeding.
