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Prime Minister Chris Hipkins believes New Zealanders will recognise the domestic and global factors that have contributed to two consecutive quarters of negative economic growth, considered a technical recession, when it comes time to vote later this year.

Statistics NZ data released yesterday confirmed market expectations by showing the economy had shrunk in the first three months of 2023.

Revised data showed\xa0GDP contracted by 0.7 per cent\xa0in the final quarter of 2022, worse than the 0.6 per cent recorded earlier.

Hipkins, asked whether he thought the country being in a recession would lose him the election, said Labour could enter the campaigning period with a \u201cproud\u201d economic track record.

\u201cWe\u2019ve managed New Zealand\u2019s economy through a number of very challenging times in recent years, including a global pandemic, including an international spike in inflation and including the current economic turmoil that we see globally as well.

\u201cThis is part of a global economic downturn, New Zealand\u2019s not immune from those things.\u201d

In a statement yesterday, Finance Minister Grant Robertson said he believed the Auckland floods and Cyclone Gabrielle were the chief contributors to the recession.

Robertson said he was not surprised and was quick to reference how the \u201csecond-largest natural disaster to hit New Zealand\u201d - Cyclone Gabrielle - had tested the economy\u2019s resilience.

\u201c[Today\u2019s] result reflects the impact of the Auckland Anniversary floods and Cyclone Gabrielle, with estimates of hundreds of millions of dollars of lost production and activity across agriculture, forestry, fishing, transport and manufacturing due to the extensive flooding,\u201d he said.

\u201cWe know 2023 is a challenging year as global growth slows, inflation has stayed higher for longer and the impacts of North Island weather events continue to disrupt households and businesses.

\u201cLooking ahead, export growth, the tourism rebound, returning international students, migration inflows and investment in the recovery mean the economy is well-positioned to handle challenging times.

\u201cToday\u2019s outcome fits the definition of a technical recession by the barest of margins. But the resilience of the New Zealand economy, including historically low unemployment, means it will not have the impact that would normally be associated with this term.\u201d

Opposition parties claimed the blame sits with Robertson, saying Kiwis\u2019 livelihoods are now under further threat amid \u201cexcessive inflation, high interest rates [and] a severe balance of payments deficit\u201d.

National finance spokesperson Nicola Willis said \u201cred lights are flashing for the New Zealand economy\u201d, which was now \u201cincredibly fragile.

\u201cWhile the Government continues to make excuses, the data does not lie: New Zealand is now in worse shape than many of the countries we compare ourselves to including Australia, Canada and the United States, all of which have faced similar global challenges but none of which face the toxic economic predicament we now find ourselves in.

\u201cThe simple fact is that Labour has mismanaged the economy and New Zealanders are paying the price.

\u201cThis recession is a red-light warning: the time for cavalier big-spending, anti-business, anti-growth policies is over.\u201d

National deputy leader and finance spokesperson Nicola Willis doesn't buy Robertson's claim the recession was caused by the impact of the severe weather events earlier this year. Photo / Mark Mitchell

Act leader David Seymour dubbed Robertson\u2019s approach to paying for cyclone and flooding costs as an \u201cAfterpay economy.

\u201cToday\u2019s GDP figures mean that even with Grant Robertson irresponsibly putting the economy on Afterpay with $7 billion borrowing this year, New Zealand has been unable to avoid a recession,\u201d Seymour said.

\u201cIt\u2019s buy now, pay next generation, but the economy is shrinking anyway.\u201d

He believed economic growth was being constrained by \u201ctoo much regulation and red tape\u201d - something Act had vowed to target through a\xa0new Ministry of Regulation.

\u201cAct will get rid of [regulation], whether it\u2019s [Resource Management Act] regulations making it too hard to use land and discouraging investment, productivity-sapping workplace relations laws making it impossible to employ staff, or banking laws like the [Credit Contracts and Consumer Finance Act] that make it too hard to get finance.\u201d

Taxpayers\u2019 Union Campaigns Manager Callum Purves accepted this year\u2019s severe weather events would have limited primary production, but said the Government needed to \u201cshoulder much of the blame for this economic contraction.

\u201cNew Zealand might have only just entered a technical recession, but without drastic and urgent action from the Government to rein in its spending, this situation may well persist for some time to come.\u201d

- Adam Pearse, NZ Herald

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