New Zealand's economy shrank in the third quarter of 2023, official data shows.
Gross domestic product fell by 0.3 percent from the June quarter, Statistics NZ said, noting the decline was driven by goods producing industries.
Most economists had expected relatively flat GDP in the September quarter.
It was the first time since March GDP had shrunk on a quarter-by-quarter basis.
On an annual basis, GDP grew 1.3 percent in the 12 months to September.
Nathaniel Keall, an economist at ASB, said the September quarter data showed there was "considerably less activity taking place than we thought".
"As we've previously highlighted, economic activity is decelerating at a time that NZ net migration figures continue to prove strong," he said in a note. "That means that on a per-capita basis, the shrinkage is much more marked."
However, Keall said ASB still wasn't expecting official cash rate (OCR) cuts until the start of 2025.
Last month, the Reserve Bank (RBNZ) kept the cash rate at 5.5 percent and signalled it wasn't close to cutting rates. That was so the central bank could bring New Zealand's stubbornly high inflation - at 5.6 percent in Stats NZ's most recent reading - under control.
"Should that weaker growth outlook translate into a swifter reduction in inflationary pressures, OCR cuts could come earlier than the early 2025 timeframe we've been anticipating up until now," Keall said. "However, we caution that the weak growth over the past year has still coincided with relatively high inflation."
Flat economy
The RBNZ said in its monetary policy statement last month it expected slow growth in Aotearoa's economy until at least the end of next year. The central bank forecast no growth in the December quarter and an expansion of just 0.1 percent in the three months to March 2024.
Still, the RBNZ had forecast minor GDP growth of 0.3 percent in the September quarter as opposed to a contraction.
New Zealand's goods-producing sector shrank by 2.6 percent in the three months to September, with manufacturing and construction contracting by 3.4 and 1.4 percent respectively.
The Stats NZ data also showed transport, postal and warehousing was down 4.5 percent.
Exports of goods and services - something New Zealand's economy heavily relies on - fell by a sharp 2.6 percent. However, exports grew by a revised 4.7 percent in the June quarter and were up 9.4 percent year-on-year.
Prime Minister Christopher Luxon and Finance Minister Nicola Willis have promised to boost the economy but no significant growth was expected in the near-term, based on RBNZ and market expectations.
"Today's data confirms what Kiwis already know: New Zealand's economy is under major strain," Willis said in a statement.
"It's evident that the impact of rising interest rates in response to rampant inflation are putting pressure on families already struggling with the cost of living. That pain isn't just affecting families - it's dragging down the productive economy.
"Today's data confirms that New Zealand needs urgent economic repair. That's why the coalition Government is moving quickly - reducing costs on business, restoring confidence in the fight to beat inflation and eliminating wasteful spending."
