New Zealand import volumes surge, adding to risk of recession

New Zealand import volumes surged the most in two years in the first quarter, adding to signs the economy may have been in a recession.

Import volumes jumped 6.7% from the fourth quarter, while export shipments increased just 1%, Statistics New Zealand said Friday in Wellington. The drop in net exports is a drag on gross domestic product.

The economy shrank 0.6% in the final three months of 2022 and several economists project a contraction in the first quarter of this year, which would put it into recession. However, there is more partial data to be released before the GDP report is published on June 15.

While first-quarter retail sales fell 1.4%, another report today showed construction volumes unexpectedly increased 0.6%. Further data on manufacturing and wholesale trade is scheduled next week.

Today’s terms of trade report showed a large jump in fuel imports while the volume of many other products fell. Goods exports were subdued. 

Still, there has been a stronger-than-expected lift in tourism, which boosts the economy, making the overall impact from the external sector on GDP difficult to pinpoint.  

The Reserve Bank last week reiterated that it expects the economy expanded slightly in the first quarter. It continues to see a shallow recession in the second and third quarters of this year.