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IMF Warns of Deeper Recession Risk for New Zealand Due to Inflation Concerns

IMF Warns of Deeper Recession Risk for New Zealand Due to Inflation Concerns

New Zealand is facing a potential deeper recession, as indicated by the International Monetary Fund (IMF) in its annual report. The IMF emphasizes th

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New Zealand is facing a potential deeper recession, as indicated by the International Monetary Fund (IMF) in its annual report. The IMF emphasizes that the government needs to control spending to avoid prolonged high inflation, which could persist until 2025. While the economy has slowed, labor market constraints have driven up wages, and a significant positive output gap has contributed to elevated inflation. The IMF predicts a growth rate of around 1% for 2023 and 2024, potentially leading to a technical recession. The government’s efforts to address weather-related events and financial pressures may provide short-term boosts. However, inflation is expected to gradually decrease to the target range of 1โ€“3% by 2025 due to increased non-tradable inflation. The decline in the New Zealand dollar and the performance of the NZX index are raising concerns, indicating potential challenges ahead.

More info:

https://www.imf.org/en/Countries/NZL

https://www.stats.govt.nz/information-releases/gross-domestic-product-march-2023-quarter/

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