A leading economist believes New Zealand will bounce out of a recession when the new figures are revealed later this week but warns the economy isn't back to normal.
It comes after the economy contracted over the previous two quarters, putting New Zealand into recession.
Gross domestic product (GDP) data for the June quarter will be released by Stats NZ on Thursday, which will unveil whether New Zealand has started its recovery.
Infometrics Principal Economist Brad Olsen told AM on Monday he expects New Zealand's economy to improve when the latest data is released.
He told AM co-host Ryan Bridge Infometrics is predicting a 0.8 percent increase in the June quarter GDP.
"The thinking is we've come through that awful weather disruption at the start of the year, we've been able to see some areas that have started to improve," he said.
Olsen believes a big reason for that is a surge in migration.
"A lot of that is just because we simply have more people, higher net migration with nearly an extra 100,000 people over the last year, means there's more economic work to do servicing that higher population," Olsen said.
"So although we are expecting a bounce, that doesn't necessarily signal that the economy is in a great shape still."
Stats NZ revealed last month a record number of migrants arrived in New Zealand.
There was a provisional net migration gain of 86,800 in the June 2023 year, reversing a net migration loss of 17,600 in the June 2022 year. These figures were just below Aotearoa's highest annual net migration gain of 91,700 in the March 2020 year.
Olsen isn't the only one predicting New Zealand to bounce out of a recession, with leading banks estimating growth of between 0.4 percent to 0.8 percent for the June quarter GDP.
"We're expecting payback for the capacity-constrained, cyclone-caused, stunted growth over the summer period. We expect output rebounded 0.6 per cent over [the second quarter]," Kiwibank senior economist Mary Jo Vergara said.
"Per capita growth however is likely to be soft. Population growth has picked up the pace with the resurgence of migration. It's likely we see a further slide in per capita output in [the second quarter]."
ANZ wasn't as positive but still predicted New Zealand to come out of a recession while Westpac was the most positive predicting a 0.8 percent growth.
"Economic momentum is clearly softening despite strong population growth, but the GDP data will still have a fairly wonky signal-to-noise ratio, reflecting lingering cyclone and Covid impacts," ANZ senior economist Miles Workman said.
While New Zealand is looking like coming out of a recession, it wasn't all good news with Olsen saying New Zealand's economy has challenges going forward.
"I think the challenge as we go forward is we might not be able to continue growing the economy year on year by just having more and more people coming through but no real productivity growth," he said.
"So although we are expecting we might be officially out of recession come Thursday's announcement, we might still be in what almost feels like a shadow recession continuing because that population growth is the real thing that's underpinning economic activity.
"In fact, Treasury at their latest pre-election update when they outlined their economic track, suggested that when you do take account of population growth, economic activity would actually be falling or flat for effectively the next year still and it really is the case where you've got some parts of the economy which are still rising, but a lot of others that are pulling back."
Olsen pointed to construction and retail as sectors that are struggling.
Watch the full interview with Brad Olsen in the video above.
