New Zealand is now officially in a recession as the latest GDP figures show six months where the economy was shrinking rather than growing, as the country continues battling cyclone recovery and pandemic headwinds.

This morning, Stats NZ released its latest data for the period between January and March, showing a decline of 0.1% in gross domestic product.

Following the December quarter's 0.6% fall in GDP, another drop in the first quarter of this year means the country is technically in a recession.

A "technical recession" is defined when there are two successive quarters of negative GDP growth, meaning six months when the economy is shrinking rather than growing.

Stats NZ economic and environmental insights general manager Jason Attewell said most industries were in decline in the quarter.

"Business services was the biggest downwards driver, down 3.5%. This was partly offset by a 2.7% increase in information media and telecommunications this quarter," he said.

"Management consulting, advertising, scientific, and engineering design services drove the fall in business services.

The March 2023 quarter included the initial impacts of the extreme weather events and ongoing teachers' strikes, Attewell said in a media release.

"The adverse weather events caused by the cyclones contributed to falls in horticulture and transport support services, as well as disrupted education services," he said.

"Fewer teaching days led to falls in primary and secondary education services."

Prior to the announcement, economists had been keen to emphasise that the economy was already on a cooling trajectory — regardless of the specific GDP figure today.

Forecasters were earlier mixed about whether the GDP measure would fall or rise, but there was consensus that any change would be around the zero per cent mark.

The expenditure measure of GDP fell 0.2% this quarter, driven by rundowns in inventories held by businesses, and a fall in exports of services, according to Stats NZ.

Attewell said a 2.4% increase in household consumption expenditure and 2% growth in investment in fixed assets partially offset the expenditure falls. The household expenditure growth was led by increased spending by Kiwis on international travel.

In contrast, households spent less on goods, particularly grocery food.

Population growth a significant variable

ANZ chief economist Sharon Zollner said earlier this morning that migration and population growth was contributing to parts of growth in the economy.

"We've got such strong population growth at the moment that that's another variable that's gonna affect the numbers."

Broken down by sector, Zollner told Breakfast that tourism had seen strong performance over the summer and would likely be a positive story in the first quarter.

"We've had about 70% of normal, pre-Covid numbers, which has been a pretty decent bounce, actually. The summer is obviously a key time for tourism, so that should be a feature of these numbers."

The economist said how the sector did in the coming months would ultimately be determined by global factors, like how much tourists would be willing to spend to come to Aotearoa with a slow recovery in many economies around the world.

"The forward-looking bookings are looking quite good for the next season. But it is a bit of a matter of wait and see."

*Information Sourced 1 News 15/06/2023