March 17, 2023 11:00am by David Farrar

GDP drops 0.6%

The economy shrank 0.6% in the final three months of last year, Stats NZ has announced.

It also revised down its estimate of growth in the previous September quarter to 1.7%, from its original estimate of 2% growth.

That is a big drop. In nominal terms it means the economy shrunk by $2.5 billion.

Finance Minister Grant Robertson said the drop for the quarter was “a little larger than what was expected”, but added that it came off the back of two very strong quarters.

“When you look at the annual numbers, we are over 2% and that’s better than most of the countries we compare ourselves to, but clearly there has been a slowing in the New Zealand economy,” he said on Thursday afternoon.

Australia’s GDP grew 0.5% this quarter and 2.7% annually.

The Reserve Bank predicted at the time it released its latest monetary policy statement last month that GDP had grown 0.7% in the December quarter

Wow. They predicted 0.7% growth and we actually had a 0.6% shrinking. That is a huge forecast fail.