New Zealand plunges into recession after two major disasters in three months – amid dire warning that Australia is ‘on the brink of financial collapse’
- New Zealand entered a recession
- The country experienced another quarter of negative economic growth
New Zealand is in recession after another quarter of negative economic growth.
On Thursday, Stats NZ released data showing the Kiwi economy contracted by 0.1 percent in the first quarter of 2023.
The reverse follows a 0.7 percent slump in the last quarter of 2022 — revised up from 0.6 percent — and the country’s second recession from the COVID-19 pandemic.
NZ was hit by two major disasters in the first three months of the year.
Auckland experienced major flooding as Cyclone Gabrielle ravaged large parts of the country, destroying infrastructure, homes and productive land.
New Zealand is in recession after another quarter of negative economic growth
More than a dozen people were killed, and Treasury estimated a cleanup bill of $NZ9-14.5 billion ($A8.2-13.2 billion).
The recession will have political ramifications and Labor is aiming for a third term in office on October 14.
Like Australia, the slowdown has been driven by the Reserve Bank (RBNZ), which raised the official cash rate from 0.25 percent to 5.5 percent in the past 20 months.
The RBNZ has relentlessly hiked rates at its past 12 meetings, including an unprecedented triple increase of 75 basis points last November.
Headline inflation was last measured at 6.7 percent in the first quarter of 2023, down from a peak of 7.3 percent in the second quarter of 2022.
The GDP figure stood in stark contrast to forecasts from both the Reserve Bank and the Treasury, which had predicted a 0.3 percent increase in the first quarter of 2023.
Economists were divided on their forecasts, with major banks tipping some results.
A poll of 18 economists conducted by Reuters produced an average forecast of a contraction of 0.1 percent.
The news comes after a leading entrepreneur warned that Australia is on the verge of financial collapse due to a housing bubble similar to the one that crippled the US economy in 2008, and relying on surging immigration to prevent it from bursting.
Matt Barrie, founder and CEO of staffing agency Freelancer.com, outlined a terrifying list of factors that he claimed would soon plunge Australia into economic collapse.
He said the rising cost of living, resulting hikes in interest rates and rising mortgage payments were some of the worrying signs of impending financial disaster.
The recession will have political ramifications as Labor seeks a third term on Oct. 14 (Photo: New Zealand Prime Minister Chris Hipkins)
Matt Barrie, founder and CEO of staffing agency Freelancer.com, outlined a terrifying list of factors he claimed would soon plunge Australia into economic collapse
Mr Barrie compared Australia’s current economic climate to the global financial crisis triggered by the 2008 housing collapse in America, when reckless lending and risk-taking by banks drove house prices up and then inevitably crashed.
“It’s exactly the global financial crisis that we’ve seen in America and is playing out here in Australia today,” he told Australian online broadcaster ADH TV.
Mr Barrie, who rose to national prominence for opposing Sydney’s exclusion laws in 2016, said every Australian realizes that ‘something is terribly wrong in this country’ as mortgages, bills and the cost of living skyrocket.
He said Australian workers have been forced to take out huge mortgages because of extraordinary house prices, which have been pushed higher and higher by importing more and more people to support rising demand.
“The only reason house prices are rising is because we’re bringing more people into the country,” he added.
“We have brought 620,000 students to this country, and everyone knows they are not students, but cheap labor who have been deployed to support GDP and work in 7-11 or drive an Uber.
“It really is late-stage desperation in a Ponzi scheme. The housing market, which has been rising relentlessly for 60 years, has led to a Ponzi out of all proportion – it is the housing bubble of all bubbles.’