New Zealand's Treasury predicts that the economy would avoid recession in 2023.

The New Zealand’s Treasury Department, in its recent report, anticipated that the economy would slowly avoid a recession in the upcoming year, despite an increase in interest rates and reduced demand.

May 20, 2022 - 01:22 PM 262 views

New Zealand's Treasury predicts that the economy would avoid recession in 2023.

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© New Zealand's Treasury predicts that the economy would avoid recession in 2023.

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The New Zealand’s Treasury Department, in its recent report, anticipated that the economy would slowly avoid a recession in the upcoming year, despite an increase in interest rates and reduced demand.

Important Quotes (Via Bloomberg)

The Treasury currently projects that inflation will fall from 6.9% to 5.2% by June 2023.It doesn’t seem to be returning to the RBNZ’s 1-3% target level by early 2025.

As always, the Treasury is enclosed as an alternate scenario in the budget.

The negative slant, which predicts more consistent inflation and a sharper increase in interest rates, is depressing, projecting five consecutive quarters of GDP declines at the start of 2023, as well as a sudden increase in unemployment.

RBNZ policymakers will meet in the upcoming week, with another half-percentage point increase in the official cash rates (OCR) on the cards.

The Market Reaction

Amid recession alarms, the NZD/USD currency pair, at the time of writing, is trading 0.16% below on the day at 0.6367 points. The US dollar (USD) has reclaimed its lost ground in comparison with its main competitors.

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