Recession fears in New Zealand as GDP figures loom

Worsening forecasts have prompted New Zealand economists to revise down their expectations for the Kiwi economy, ahead of GDP figures being released.

Market sentiment is for Stats NZ to reveal a mild contraction in Q4 2022 when the government body releases data on Thursday.

And if so, that spells bad news for the New Zealand government, which may fight an election campaign with an economy in recession.

The New Zealand economy has shown its resilience through COVID-19, surprising all-comers with 2.0 per cent growth in Q3 and 1.9 per cent growth in Q2 last year.

However, the rebound is expected to grind to a halt in the December quarter figures, with market consensus for a 0.2 per cent contraction.

"In some senses that's not surprising given where we're coming off a two per cent growth in the September quarter. It's quite hard to keep up that level of growth," Finance Minister Grant Robertson said.

Kiwibank senior economist Mary Jo Vergara said the Reserve Bank's work to raise the official cash rate - with the steepest hikes on record in Q4 last year - would inevitably slow the economy.

"The December report card is largely a story of payback. However, it foreshadows what we might see later this year," she said.

"Our base case scenario still sees Aotearoa enter a shallow recession this year. It's a direct result of the RBNZ's hawkish policy actions."

Both the Reserve Bank and Treasury predict a recession for New Zealand in 2023 - but both also tipped positive Q4 results in earlier forecasts.

Should Stats NZ report a contraction on Thursday, it would mean its next release - in June - could confirm a recession, as defined as two consecutive quarters of negative growth.

Opposition finance spokeswoman Nicola Willis said the real-world experience of Kiwi workers and businesses was one of difficulty.

"They are doing it really tough. Wages aren't keeping up with inflation. It's still very hard to get workers," she said.

"Lots of businesses are very worried about the future and we've got an economy that is not delivering gains for everyday people."

Also on Wednesday, Stats NZ released data showing New Zealand's current account deficit had widened to its largest ever point.

New Zealand imported $NZ33.9 billion ($A31.5 billion) more than it exported in 2022, or 8.9 per cent of its GDP, up from $NZ21.2 billion ($A19.7 billion) in 2021.

Mr Robertson said COVID-specific circumstances were to blame, pointing to forecasts it would come down.

"We didn't have the borders open from a tourism perspective (and)the price of imported goods is very high largely as a result of COVID," he said.

The largest previous gap was 7.8 per cent of GDP, measured in 2008 during the global financial crisis.