New Zealand falls into recession after enduring two major disasters in three months – amid grave warning Australia is ‘on the brink of financial collapse’
- New Zealand plunged into recession
- Country had another quarter of negative economic growth
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New Zealand has again lapsed into recession, as twin natural disasters followed on the back of crippling Covid lockdowns that devastated the country’s economy.
On Thursday, Stats NZ released data showing the Kiwi economy contracted by 0.1 per cent in the first quarter of 2023.
The reverse follows an 0.7 per cent slump in the last quarter of 2022, thus meeting the standard definition of recession: consecutive quarters of contraction in economic growth.
NZ was hit by two major disasters in the first three months of the year.
Auckland suffered major flooding while Cyclone Gabrielle lashed vast swathes of the country, destroying infrastructure, homes and productive land.
New Zealand is in recession following another quarter of negative economic growth
More than a dozen people were killed, with Treasury estimating a cleanup bill of $NZ9-14.5 billion ($A8.2-13.2 billion).
The recession will likely have political consequences, with Labour seeking a third term in office on October 14, now under new leader Chris Hipkens following the sudden resignation of Jacinda Ardern.
Like Australia, the Reserve Bank of New Zealand has been trying to combat runaway inflation by raising official interest rates, escalating quickly from 0.25 per cent to 5.5 per cent in the past 20 months.
The RBNZ has relentlessly raised rates at the past 12 meetings, including an unprecedented triple hike of 75 basis points last November.
Headline inflation was last measured at 6.7 per cent in Q1 2023, down from a peak of 7.3 per cent in Q2 2022.
The GDP figure in the opening quarter of 2023 was at odds with official predictions, with both the Reserve Bank and Treasury having forecast modest 0.3 per cent growth.
Economists were split on their predictions, with major banks tipping a spread of results.
A poll of 18 economists conducted by Reuters produced an average forecast of a 0.1 per cent contraction.
The news from across the Tasman comes after a leading entrepreneur warned Australia is on the brink of financial collapse due to a housing bubble similar to that which crippled the US economy in 2008.
Matt Barrie, founder and CEO of labour hire company Freelancer.com, outlined a terrifying list of factors which he claimed would soon tip Australia into an economic meltdown.
He said rising inflation, consequent interest rate hikes and surging mortgage repayments were all symptoms of a looming financial disaster.
The recession will come with political consequences, with Labour seeking a third term in office on October 14 (pictured, New Zealand prime minister Chris Hipkins)
Matt Barrie, founder and CEO of labour hire company Freelancer.com, outlined a terrifying list of factors which he claimed would soon tip Australia into an economic meltdown
Mr Barrie likened the current economic climate in Australia to the Global Financial Crisis that was caused by the collapse of the housing market in America in 2008, when reckless lending and risk-taking by banks saw home prices surge and then inevitably crash.
‘It’s exactly the global financial crisis which we saw in America, happening here in Australia today,’ he told Australian online broadcaster ADH TV.
Mr Barrie, who rose to national fame for opposing the Sydney lock-out laws in 2016, said every Australian realises ‘something is terribly wrong in this country’ as mortgages, bills and the cost of living skyrocket, far higher than officially acknowledged.
He said Australian workers are being forced to take on massive mortgages due to extraordinary housing prices, which are being pushed ever higher by importing more and more people to sustain demand.
‘The only reason why house prices are going up is because we’re bringing more people into the country,’ he added.
‘We have 620,000 students brought into this country, and everybody knows they’re not students but a low-cost workforce that’s been brought in to prop up GDP and work in 7-11 or drive an Uber.
‘Really it’s late-stage desperation in a Ponzi scheme. The housing market going up for 60 years relentlessly has led to a Ponzi out of all proportions – its the housing bubble of all bubbles.’