General view of residential housing in central Wellington, New Zealand [Source: AAP Image/Dave Hunt]

New Zealand’s economy has again gone backwards, with new GDP data confirming the depths of its economic malaise.

On Thursday, Stats NZ confirmed the Kiwi economy contracted by 0.2 per cent in the quarter to June, and 0.2 in the previous 12 months.

It is the fifth quarter in the last seven that GDP figures have been in the red, confirming an economy in retreat, ravaged by high interest rates.

Even more dire was the GDP per head result, an 0.5 per cent fall, marking the seventh consecutive quarter of negative results.

Cumulatively, GDP per capita has fallen 4.6 per cent since September 2022.

Interest.co.nz noted that crunch was bigger than NZ suffered during the Global Financial Crisis in 2007.

“It’s effectively a recession that’s lasted two years,” Kiwibank chief economist Jarrod Kerr told the NZ Herald.

“Red, black, red, black and now back into red. We’ve recorded a triple trough in economic activity.”

The GDP per capita figures show the Kiwi economy has essentially been propped up by bumper migration in the past two years.

Leading the losses in the June quarter were primary industries, with agriculture dropping 1.4 per cent and mining by 3.7 per cent.

The services sector – which makes up three-quarters of the Kiwi economy – was flat, though wholesale and retail trade also both fell by 1.3 per cent.

“Activity in retail trade and wholesale trade has been in steady decline since 2022,” Stats NZ’s Ruvani Ratnayake said.

Bucking the trend was manufacturing, growing by 1.9 per cent.

New Zealand’s June quarter result is at odds with developed countries it compares itself to, with Australia (0.2 per cent), Canada (0.5 per cent), the UK (0.6 per cent) and the OECD (0.5 per cent) all booking increases.

The poor result might have been even worse.

The market consensus was for a 0.4 per cent fall in the quarter, with the Reserve Bank of New Zealand (RBNZ) tipping 0.5 per cent.

The central bank believes this contraction will form a part of NZ’s third technical recession, defined as two consecutive quarters of negative growth.

In the December 2022 and March 2023 quarters, NZ went backwards 0.5 and 0.3 per cent, while in the September and December 2023 quarters, GDP fell 0.3 and 0.1 per cent.

In an August forecast – as it cut the official cash rate (OCR) for the first time since the pandemic – the RBNZ tipped an 0.2 per cent reverse next quarter.

The RBNZ has the OCR at 5.25 per cent and is widely backed to cut interest rates further at its next meetings.

Mr Kerr said “miserable economic report card” showed the RBNZ had plenty of work to do.

Finance Minister Nicola Willis said “brighter days are ahead”.

“The economy has been suffering the after-effects of a long cost of living crisis, with the Reserve Bank having to keep rates high to tackle inflation,” she said.

“Inflation is forecast to be under three per cent this quarter, signalling an end to the extreme price increases New Zealanders have experienced over many years.”

The Labour opposition aimed at Ms Willis’ economic management, despite her being in the job for less than 12 months.

“Nicola Willis’ hit list is now higher unemployment, low GDP, and record high migration as Kiwis look to escape the effects of her poor financial decisions,” finance spokeswoman Barbara Edmonds said.

While outward migration is running at record levels, net migration is still well above average of recent decades.