New Zealand economy contracts

New Zealand's economy contracted by 0.2% in the second quarter of 2024, a slightly better performance than the expected 0.4% decline, according to Statistics New Zealand. This contraction follows a revised growth of 0.1% in the first quarter, with annual GDP down 0.5%, aligning with market expectations. The Reserve Bank of New Zealand (RBNZ) has initiated rate cuts, with predictions of a 25 basis point cut in October, amid signs of a weak economic environment and inflation above target. Activity decreased in nine out of sixteen industries, particularly affecting retail, agriculture, and wholesale sectors, although manufacturing experienced a 1.9% increase. Economists caution that the current growth recession may persist, with GDP per capita seeing its fourth consecutive quarterly decline. Analysts suggest ongoing economic headwinds and expect further adjustments in monetary policy in light of the recent U.S. Federal Reserve rate cuts.