The Finance Minister says forecasts he's receiving don't currently show a recession is on the cards, but he acknowledges that predictions are being updated regularly.
It follows StatsNZ last week announcing that gross domestic product (GDP) had fallen 0.2 percent between the start of January and the end of March this year. The drop raised concerns New Zealand is on the way to a recession, which is two consecutive quarters of negative growth.
"That is still not the forecasts we are receiving," Grant Robertson said on Tuesday morning. "Obviously, internationally there is concern about recessions in different countries. But the consensus forecast remain that is not the case. Those forecasts get updated regularly now."
Economists with two of New Zealand's main banks last week said they were expecting positive growth in the June quarter given people were coming out of Omicron isolation, increasing activity.
But a recession at the end of the year or in early 2023 is possible. ANZ senior economist Miles Workman said New Zealand may face a "nasty cocktail" of higher interest rates, inflation continuing to be on the upside and house prices falling.
It's having an obvious impact on Kiwis, with consumer confidence nose-diving to its lowest level since records began in 1988, according to new data released by Westpac. Confidence fell 13.4 points as households expressed worry that their financial position had deteriorated in recent months and would continue to weaken over the coming year.
"That's despite the introduction of policy measures to limit the pressure on living costs, such as the reduction in the fuel tax and halving of public transport charges," Westpac said.
Robertson was asked on Tuesday whether the Government's doing enough.
"I believe we are. I believe what we have done is get the balance right between supporting New Zealanders with cost of living pressures but also making sure we don't unecessrily exacerbate inflation," Robertson said.
"We have been temporary, we have been targeted with our support. We continue to monitor it, obviously, in the face of the ongoing pressures, but in order to make sure that New Zealanders are supported, I think we have done the right things."
On top of the Government's April 1 changes - which included increases to the minimum wage, tax credits and benefits - there's also been the slashing of fuel taxes and public transport fares, as well as the $350 cost of living payments to start rolling out in August for those making under $70,000 and not receiving the Winter Energy Payment.
While the Government says it's been "targeted", Treasury warned against the cost of living payments, describing them as "broad-based".
"A broad-based one-off payment of this magnitude would add to inflationary pressures in the short-term, although the risk to longer-term inflationary pressures is relatively small assuming any interventions of this nature were temporary," Treasury said in May.
The OECD said earlier this month that the Government should be more narrowly focused in the future.
"In order to avoid fuelling inflationary pressure in the near term, any additional fiscal support against higher living costs should be more targeted. The Government should also consider deferring some of its infrastructure investment."
Robertson said on Tuesday that the Government's support is more targeted that the Opposition's proposals. The National Party wants to adjust all tax thresholds to inflation and remove the new top tax rate, while ACT wants to simplify the system to two tax rates.
"Those political parties who are promising cross-the-board permanent tax cuts need to ask themselves whether or not they will be unnecessarily exacerbating inflation," Robertson said.
He said the drop in consumer confidence isn't unexpected "given the conditions we see at the moment".
"New Zealanders are every day facing the impact of the global inflation pressures that we are seeing. While it is tough out there for many households and many businesses, that has why we have put into place the supports that we have.
"Clearly, the pressures are going on longer because the war in Ukraine is going on longer. The supply chain situation is still difficult, although there are some improvements in that area. But this is going to be a tough 2022, and we have signalled that for some time."
National's finance spokesperson, Nicola Willis, said the consumer confidence survey was a "massive vote of no confidence in the Government's approach to economic management".
"Grant Robertson remains in denial and keeps blaming international factors. The truth is New Zealand is performing worse than many countries.
"In the past year we have dropped eleven places in the IMD Global Competitiveness survey. We have now fallen behind Australia, with the report writers highlighting 'short-term policy thinking' as part of our problem.
"Labour urgently needs to deliver a plan to address the cost of living crisis and to grow the economy. Until they do, Kiwis will keep going backwards."
ACT leader David Seymour said Kiwis are "paying more for almost everything".
"Prices are rising because the Government has shut down production and compensated with a flood of borrowed and printed cash," Seymour said.
"This is why Kiwis can’t afford pharmaceuticals. Its why families have been hit harder by the cost of living crisis. It means there’s less money to put away for retirement."
In New Zealand, inflation in the March quarter was 6.9 percent. The Budget Economic and Fiscal Update (BEFU) in May projected annual inflation in 2023 would be 5.2 percent and remain outside of the Reserve Bank's targeted range of 1-3 percent until 2025.
