New Zealand's economy shrunk by 0.3 per cent in the September quarter in a shocking and surprise result below all predictions.
Stats NZ released gross domestic product (GDP) figures on Thursday, which painted a dire picture of the Kiwi economy.
It revised growth figures for the first half of 2023 down, which meant New Zealand suffered a technical recession at the start of the year.
Bumper growth of 0.9 per cent in Q2 2023 was revised lower to 0.5 per cent growth.
In all, it shows New Zealand's economy shrunk in three of the past four quarters.
Without record migration, the contraction would have been even bigger, with GDP per capita falling by 0.9 per cent in Q3 2023.
"All goods producing industries were down this quarter, led by a fall in manufacturing," Stats NZ spokeswoman Ms Ratnayake said.
Manufacturing contracted by 3.4 per cent in Q3, with transport down by 4.5 per cent.
The surprise result kicked off a round of blame-casting by the new government, which took office a fortnight ago.
Finance Minister Nicola Willis said the results severely diminished the outgoing government's economic credentials.
"New Zealanders are suffering the lag effects of three years of very poor economic decision making," she said.
"We had a government that threw fuel in the inflation fire, that then drove the Reserve Bank into hiking interest rates higher and now our economy is shrinking."
Former Labour Finance Minister Grant Robertson said New Zealand was hardly the only economy to be feeling a pandemic hangover.
"We have a slowing global economy. New Zealand is not immune to this," he said.
The RBNZ was among those to miss the mark with its forecast, tipped 0.3 per cent growth, with the midpoint of bank forecasts at 0.2 per cent growth.
The slowdown has been engineered by the RBNZ, which lifted the official cash rate to 5.5 per cent to bring inflation down.
Consumers price index inflation in New Zealand is at 5.6 per cent, down from the peak of 7.3 per cent in mid-2022 but well below the RBNZ's target band of one to three per cent.
Council of Trade Unions chief economist Craig Renney said the figures should mean the RBNZ walks away from threatened further rate rises in 2024.
"The data should give decision-makers food for thought. If growth is weakening, additional interest rate increases should be even further from consideration," Mr Renney said.
Higher interest rates are impacting household spending, which was down 0.6 per cent in the September quarter.
Stats NZ said despite an overall fall in GDP, eight of their 11 measured service industries experienced growth, including healthcare and property services.
New Zealand's aenemic GDP figures in 2023 follow a two-year period when it was among the best performing economies in the developed world during the COVID-19 pandemic.
