New Zealand’s gross home product fell 0.1% within the first quarter, based on authorities knowledge printed Thursday, as its central financial institution launched into one of the vital aggressive price hike cycles on the earth.

The newest knowledge from Wellington marks a technical recession for the economic system, after reporting a revised 0.7% decline within the remaining quarter of 2022.

A technical recession is outlined as two consecutive quarters of contraction.

In contrast with a 12 months in the past, the economic system grew 2.9% within the first quarter. Economists surveyed by Reuters anticipated New Zealand to mark a contraction of 0.1% quarter on quarter and progress of two.6% 12 months on 12 months.

The New Zealand greenback dropped 0.23% towards the U.S. greenback after the discharge. Shares have been little modified — the S&P/NZX 50 Index traded 0.144% increased.

In its Could assembly, the Reserve Financial institution of New Zealand raised its benchmark price to a 14-year excessive, with the 25-basis-point hike lifting its official money price to five.5%.

“There have been a spread of outcomes at business stage within the March 2023 quarter, with simply over half of industries declining within the quarter,” New Zealand’s financial and environmental insights normal supervisor Jason Attewell mentioned.

The contraction was pushed by manufacturing declines in enterprise companies, which fell 3.5%, and transport, portal and warehousing, which was down 2.2%.

Throughout the quarter, New Zealand additionally noticed the “preliminary impacts” of Cyclones Hale and Gabrielle in addition to academics’ strikes, the information company mentioned.

“The adversarial climate occasions brought on by the cyclones contributed to falls in horticulture and transport help companies, in addition to disrupted schooling companies,” mentioned Attewell.

Manufacturing within the info media and telecommunications and property sectors rose by 2.7% and 0.7%, respectively.

New Zealand additionally noticed a contraction in commerce: export costs fell 6.9% and import costs dropped 5.4%.

“New Zealand’s economic system is within the midst of a essential, policy-induced slowdown following the robust post-pandemic restoration,” the Worldwide Financial Fund mentioned in a Wednesday mission assertion forward of the GDP launch.

The IMF additionally warned towards the central financial institution turning to financial coverage easing measures, including that it ought to nonetheless go away the door open for extra price hikes forward.

“As non-tradable inflation persists, there’s little scope to decrease the OCR for a chronic interval,” the IMF wrote.

“A reignition of demand, together with because of inadequate fiscal consolidation, and a stalling of inflation above goal would name for additional tightening of financial coverage,” it mentioned.