New Zealand narrowly avoided a technical recession with a 0.2 percent fall in gross domestic product (GDP) in the June 2024 quarter, contrary to the Reserve Bank of New Zealand’s forecast of a 0.5 percent contraction. The downward revision to the March quarter had initially raised concerns.
Economists attribute the downturn to high interest rates limiting spending, leading to declines in sectors such as retail trade, accommodation, agriculture, forestry, and fishing, as well as wholesale trade. Forestry and logging, in particular, saw a significant drop due to decreased exports of forestry primary products.
Despite the overall GDP decline, manufacturing saw a notable increase of 1.9 percent, driven by rises in transport equipment, machinery, and equipment manufacturing. Household spending also rose by 0.4 percent, with a focus on non-durable items and services. Government spending, contrary to previous promises, also increased.
On a per capita basis, New Zealand’s GDP continued to decrease, with a 0.5 percent decline in the June 2024 quarter and a 2.7 percent fall for the year ending June 2024. The country’s economy remains heavily reliant on services, with primary produce contributing only 7 percent to GDP, goods production at 20 percent, and various services making up the remaining 73 percent.
Looking ahead, forecasts by the Institute of Economic Research suggest minimal or no economic growth in the near future.
