📝 Expect Real N.Z. Recession In 2H 2023: ANZ

Q1 GDP fell 0.1%, versus the RBNZ’s expectation of a 0.3% lift. The data showed clear evidence of slowing economic momentum, but there was plenty of noise too, including likely cyclone impacts. Demand is definitely cooling, but we expect the ‘real’ recession (ie one that reflects the aggregation of individuals’ more cautious decision-making, and rising unemployment) to occur in the second half of the year.

Monthly ‘soft’ momentum data (ANZ Business Outlook, Consumer Confidence, PMI, PSI) have all continued to recover. Activity indicators continue to improve, while inflation indicators continue to wane (figure 1). Activity indicators are still subdued and inflation indicators still too high, certainly, but cheers, we’ll take those best-of-both-worlds moves.

- ANZ