Falling consumer confidence in New Zealand threatens a deep recession

There has been a sharp fall in consumer confidence in New Zealand, which causes fears of a deeper-than-expected recession.

According to the ANZ, one of New Zealand's largest banks, consumer confidence has declined to its lowest levels since the bank’s survey began in 2004. Australia's Westpac Bank survey data have shown similar results. According to Westpac, consumer confidence has fallen to its lowest levels since 1988.

Bank of New Zealand Senior Economist Doug Steel said that he had no doubt about gloomy market sentiments over the country. In his opinion, this may indicate a more serious recession than it was predicted.

At the same time, New Zealand’s central bank and the Ministry of Finance forecast a shallow recession in the second quarter of next year.

Westpac Senior Economist Satish Ranchhod underlined that weakening business along with consumer confidence decline bolstered expectations of an economic slowdown.

Demand is likely to be weak over the next year and a half, as Ranchhod noted. The recession may be quite shallow, however, it’ll lead to an increase in the country’s unemployment rate.