An unexpectedly large decline in New Zealand retail sales suggests gross domestic product may be weaker than anticipated.
Sales adjusted for inflation and seasonal effects fell 1% in the second quarter from the first, Statistics New Zealand said Wednesday in Wellington. That’s more than twice the 0.4% drop estimated by economists and represents the third straight quarterly contraction.
New Zealand households are cutting back spending as soaring prices and interest rates reduce disposable incomes. With more pain to come as many fixed-term mortgages expire and roll onto higher rates, the economy may struggle to emerge from the recession that began in the final quarter of 2022. After lifting the Official Cash Rate at pace to 5.5%, the Reserve Bank has said it’s done raising rates but also won’t be cutting them any time soon. Governor Adrian Orr said last week the economy needs another mild recession at the very least to slow activity and reduce price pressures.
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