New Zealand slips into recession after 5.5% rate hike

New Zealand's system has fallen into a recession aft the country's cardinal slope aggressively raised involvement rates to a 14-year high.

Its gross home merchandise (GDP) fell by 0.1% successful the archetypal 3 months of the year, official figures show.

That followed a 0.7% contraction successful the erstwhile quarter, which means the system is successful a "technical recession".

The Reserve Bank of New Zealand (RBNZ) has raised rates sharply since October 2021 to a 14-year high.

New Zealand was 1 of the archetypal countries to commencement raising rates successful the aftermath of the pandemic and has outpaced the US Federal Reserve. Last month, the RBNZ accrued its main involvement complaint to 5.5%.

Many New Zealanders, who were already facing rising prices, are present feeling the interaction of higher rates arsenic owe repayments and the outgo of different loans jump.

Central banks astir the satellite accrued the outgo of borrowing arsenic they tried to curb terms rises that were triggered arsenic economies opened up aft the Covid lockdowns.

Inflation was besides driven higher by the rising outgo of everything from substance to food, owed to the Ukraine war.

In the archetypal 3 months of this year, New Zealand's system was besides impacted by Cyclones Hale and Gabrielle and teachers' strikes.

"The adverse upwind events caused by the cyclones contributed to falls successful horticulture and transport enactment services, arsenic good arsenic disrupted acquisition services," Jason Attewell, economical and biology insights wide manager astatine Statistics New Zealand said successful a statement.

A method recession is defined by an system shrinking for three-month periods, oregon quarters, successful a row.

Earlier, the RBNZ signalled that it had nary further plans for further hikes. The contraction adds to expectations that the cardinal slope volition not rise rates again successful the foreseeable future.