New Zealand may slip into a technical recession this week as the country battles COVID-19 headwinds and recovery from natural disaster.
On Thursday, when Stats NZ releases its gross domestic product (GDP) data for the first quarter of 2023, economists are tipping a second-consecutive fall in economic output.
The GDP slid 0.6 per cent in Q4 2022 and another contraction would book a recession.
Both the Reserve Bank of New Zealand (RBNZ) and Treasury believe a recession will be avoided.
The central bank tipped 0.3 per cent growth at its last monetary policy meeting in May, when it signalled it was at the end of brutal tightening cycle, lifting the official cash rate from 0.25 per cent to 5.50 per cent in 18 months to fight inflation.
Treasury forecast a similar uptick in the budget books last month.
Central to where the figures land will be the response to two extraordinary weather events this summer: major flooding in Auckland and nationwide destruction from Cyclone Gabrielle, with a damage bill estimated at $NZ9-14.5 billion ($A8.2-13.2 billion).
The flooding halted much of NZ's biggest city, while the cyclone knocked out vast swathes of infrastructure, including power to Napier for a whole week.
It remains to be seen whether the economic shocks will outweigh the response, with rebuilding efforts adding to economic output.
Finance Minister Grant Robertson told AAP he was optimistic other sectors would chip in to keep NZ out of the red.
"Tourism also came back much more strongly in the March quarter than had been expected and also immigration picked up more strongly," he said.
That much was confirmed on Wednesday, when Stats NZ revealed the current account deficit had dropped slightly from record highs; to $NZ33 billion ($A30 billion), or 8.5 per cent of GDP, off the back of bumper service export growth.
Mr Robertson, who on budget day said he was confident of dodging recession this year, admitted "risks to that forecast".
"It is Treasury's independent forecast and we'll see where it lands," he said.
"Undoubtedly, other elements of the impact of the cyclone might actually have the (downside) effect.
"If it does happen, New Zealand is going to experience a short, shallow recession as opposed to a deep and prolonged one.
"But I certainly hope we don't experience that, and the forecast from Treasury is that we won't."
Kiwi banks are split on the GDP figure.
Westpac predicts an 0.4 per cent contraction, with senior economist Michael Gordon agreeing with Mr Robertson there is "a wide margin of uncertainty around the quarterly result".
ANZ chief economist Sharon Zollner has tipped 0.2 per cent growth, believing "strong population growth more than offsets disruption from Cyclone Gabrielle".
Kiwibank predicts a flat result, keeping an eye to the future.
"What's important is the outlook. And the outlook is soft at best," chief economist Jarrod Kerr said.
The GDP figures release would also have political consequences, with Kiwis off to the polls in four months' time.
A recession would give the opposition National a huge stick to beat the incumbent Labour government with ahead of the October 14 election.
