Was New Zealand halfway to recession by the end of March?
GDP figures due this week will likely show that the economy contracted during the first quarter of the year as the Covid-19 shutdown started to bite.
If that's confirmed, then it will be safe to assume New Zealand is now well and truly on the way to its first recession in more than decade.
A recession is typically defined as two consecutive quarters of contraction. A huge economic slump in the second quarter is being taken as a given by economists because of the time spent in lockdown.
Economists are picking GDP shrank by about 1 per cent in the three months to March 31.
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That period caught the first week of level 4 lockdown and several weeks of uncertainty as pandemic fears grew.
"We estimate that over the last week of the March quarter the economy was running at only two-thirds of its potential, said Westpac senior economist Michael Gordon, who is picking a 1 per cent drop.
"Our best guess is that, without the lockdown period, we would have been forecasting a small positive for GDP growth for the quarter."
The uncertainty around measuring GDP during the period meant there was a wide range of forecasts.
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"For example, the Treasury's Budget forecasts assumed a 0.7 per cent decline, while the Reserve Bank's May Monetary Policy Statement projected a 2.4 per cent drop," Gordon said.
ASB senior economist Jane Turner is tipping a fall of 1.1 per cent.
She notes this would be the first single quarter of contraction New Zealand's economy has seen in nine years.
The country narrowly avoided a double-dip recession in 2011 after the Christchurch earthquake stalled the recovery from the global financial crisis.
The first quarter contraction in GDP would be entirely because of the Covid-19 pandemic, Turner said.
"We are expecting the bulk of the economic impact to hit in [the second quarter] – with a 17 per cent quarter on quarter contraction pencilled in, followed by a modest recovery of 13 per cent in quarter three."
Some of the real-time data in the past few weeks suggested economic activity might have bounced back a bit faster than expected, she said.
"New Zealand's "hard and early" approach to managing Covid-19 turned out to be unexpectedly successful in terms of eliminating the virus, which means a stronger economy over [the second half] than we (and other forecasters, such as the RBNZ and Treasury) initially expected."
The ANZ team has also upgraded its forecasts slightly on that basis.
Senior economist Liz Kendall is picking first quarter GDP will fall by 1.3 per cent.
"We now expect that GDP contracted 20 to 21 per cent over [the first half] as a result of the pandemic and associated economic restrictions," she said.
"This is less than the 22 to 23 per cent fall previously estimated. The upward revision reflects that we have been able to move out of alert levels faster than previously expected."
She also warned that the difficulties in measuring GDP during lockdown would limit the value of Thursday's data.