New Zealand led the world in raising interest rates to combat the post-pandemic inflation wave. Now it’s officially in recession in a possible harbinger of what lies ahead for others.
Gross domestic product fell 0.1% from the fourth quarter, when it dropped a revised 0.7%, Statistics New Zealand said Thursday in Wellington. Those two quarterly contractions meet the local definition of recession.
New Zealand was one of the first to begin raising rates when inflation surged after the pandemic, with its Reserve Bank delivering 5.25 percentage points of hikes in less than 20 months — outpacing even the U.S. Federal Reserve. Now the impact is starting to be felt as households already grappling with soaring prices see mortgage repayments jump.
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