New Zealand GDP down 0.6 per cent in Q4 2022

New Zealand economists believe the Reserve Bank may quit its relentless run of rate rises as soon as next month after softer than expected GDP data.

The Kiwi economy shrank by 0.6 per cent in the final quarter of 2022, a greater contraction than the expected 0.2 per cent market consensus.

The Reserve Bank and Treasury both tipped the Kiwi economy would tip into recession in 2023, however Stats NZ data released on Thursday shows a downturn has already begun.

Stats NZ reports nine of its 16 industry categories reported a fall in activity, led by manufacturing, down 1.9 per cent.

"A fall in transport equipment, machinery, and equipment manufacturing corresponded to lower investment in plant, machinery, and equipment," Stats NZ's Ruvani Ratnayake said.

"Reduced output in food, beverage, and tobacco manufacturing was reflected in a drop in dairy and meat exports."

NZ is also battling to regain its tourist numbers from pre-COVID levels, despite lifting its last remaining travel restrictions in August.

"We would typically see higher activity in industries linked to tourism such as accommodation, retail, and transport, in what is usually the beginning of New Zealand's peak tourist season," Ms Ratnayake said.

The dip follows a 1.7 per cent rise in Q3 2022, and a 1.6 per cent rise in Q2 2022 for annual growth of 2.4 per cent in the calendar year.

Finance Minister Grant Robertson seized on the annual figure to say NZ was doing "better than countries that we compare ourselves to".

"The economy had grown strongly in the two quarters before this result. While GDP is likely to move around a bit as we continue to recover from COVID, our economy is nearly 6.7 per cent bigger than before the start of the pandemic," he said.

Australia's economy grew by 2.1 per cent last year.

Mr Robertson also noted what several Kiwi banks had forecast - light at the end of the tunnel for mortgage-holders.

The central bank (RBNZ) has raised the official cash rate at every meeting dating back to October 2021, lifting the rate from the emergency low of 0.25 per cent to sit at 4.75 per cent - its highest level since the global financial crisis.

Last month, the RBNZ predicted an OCR peak of 5.5 per cent, but Westpac believes a 25 basis point rise at next month's meeting will be the final hike of the cycle.

"Less braking is needed to bring inflation under control," acting chief economist Michael Gordon said.

Kiwibank chief economist Jarrod Kerr and ASB economist Nathaniel Keall have both tipped a 25 basis point rise in April.

"The path of the economy is going to be lumpy over the coming quarters, with recession in NZ a distinct possibility," Mr Keall said.

As with many developed nations, economic output has produced roller-coaster figures during the COVID-19 era.

Nine years of consistent GDP growth between one and five per cent was upended by the pandemic, which gave NZ a lockdown recession in 2020.

While the figures are bad news for the broader economy, they also give Chris Hipkins' government a political challenge in an election year.

Data for the first quarter of 2023 is expected in June as election campaigning hots up ahead of an October 14 poll date.