In its latest report, New Zealand’s Treasury Department predicted that the economy will narrowly avert a recession next year, in the face of rising rates and slowing demand.
Key quotes (via Bloomberg)
“Treasury projects inflation will slow from 6.9% today to 5.2% by June 2023. It doesn’t see it returning to the RBNZ’s 1-3% target range until early 2025.”
“As usual, the Treasury included an alternative scenario in the budget. “
“The downside slant — which assumes more persistent inflation and a sharper rise in interest rates — makes for grim reading, projecting five straight quarters of GDP declines starting in early 2023 as well as a surge in unemployment.”
RBNZ policymakers meet next week, with another half-percentage-point hike in the official cash rate (OCR) on the cards.
Market reaction
Amid recession warnings, NZD/USD is trading 0.16% lower on the day at 0.6367, as of writing. The US dollar has regained its lost ground vs. its major peers.
