New Zealand expects recession to come in 2023 as rates increase

According to a statement made by the government of New Zealand, the country is about to enter recession next year. An economic downturn around the world and increasing of interest rates by the central bank were cited as the main reasons for that.

On Wednesday, the Treasury Department released its Half-Year Economic and Fiscal Update in Wellington, in which a contraction of gross domestic product is projected for three quarters starting from the second one. In general, the economy is expected to shrink by 0.8% over the next year, as it was said.

According to a statement made by Finance Minister Grant Robertson, the upcoming year is going to be difficult for the global economy, and New Zealand is not safe from its consequences. Robertson noted, though, that the country is prepared for facing recession, as careful fiscal management allows the economy to enter a slowdown from a strong starting point.

In the previous month, the Reserve Bank of New Zealand forecasted four successive quarters of contraction starting from the second quarter. The main financial authority of the country also stated that it might increase the Official Cash Rate from its current level of 4.25% to the level of 5.5% to curb inflation.