Westpac has cut its forecast for New Zealand’s economy to reflect its continued tightening financial conditions. Senior economist Satish Ranchhod said in a report that we expect New Zealand’s economic growth to slow to a stagnant pace over the coming year, with the economy set to slow in late 2023/2024 as the full impact of rate hikes becomes apparent. It was briefly in recession at the beginning of the year.
While a recession is likely to be a small contraction of 0.3 per cent, from mid-2023 to mid-2024 New Zealand is likely to experience a prolonged period of weak demand with economic growth well below trend.
Weaker economic conditions will see the unemployment rate rise from the current 3.3% to around 4.8% next year.