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New Zealand set to exit recession with low growth


Latest economic data in New Zealand is expected to confirm the country's exit from a technical and shallow recession.

It may even confirm the country didn't enter a recession, as defined by negative growth in the last quarter of 2022 and the first of 2023.

On Thursday, Stats NZ will post data for the second quarter of this year, with market expectations for around half a per cent growth.

ANZ is tipping expansion of 0.4 per cent, the Reserve Bank believes it will be 0.5 per cent, and Kiwibank is forecasting 0.6 per cent.

That growth is fuelled by a surge in migration, with NZ catching up for lost time during the closed borders of the COVID-19 pandemic.

More than 90,000 immigrants have arrived in the past 12 months, which is also helping house prices to return to growth after a year in decline.

On Thursday morning, Stats NZ will also post revised GDP figures for the first quarter of this year when NZ's output shrank by just 0.06 per cent - a slender contraction but with big implications.

New Zealanders are in the middle of an election campaign. The opposition National is in the lead, with one of its key talking points that NZ is the only Asia-Pacific country in recession.

Should the revision from Q1 - which included Auckland flooding and Cyclone Gabrielle - instead show small growth, National's attack line would have been incorrect.

ANZ chief economist Sharon Zollner said the data was volatile due to so many events, but it was clear "economic momentum is softening" after 525 basis points of hikes since 2021.

"While GDP is expected to eke out a small expansion in Q2, momentum is weak and that's unlikely to change any time soon," she said.

Finance Minister Grant Robertson used the release of current account data on Wednesday to claim the economy "had turned a corner".

The current account deficit narrowed to 7.5 per cent of GDP in the June year, further than expected, and down from 8.2 per cent three months earlier.

"This is a positive result and is better than the 8.1 per cent of GDP that Treasury had forecast in the Pre-election Fiscal and Economic Update," Mr Robertson said.

"The economy has turned a corner and the narrowing deficit helps protect New Zealand in what is a deteriorating global economy."

An increase in kiwifruit, dairy exports and tourism was primarily responsible for the improved trade ledger.