In a select committee meeting on Treasury’s Half-Year Economic and Fiscal Update (Hyefu), Stephens was asked several times about the idea of a three-year-long recession. At no point did he agree New Zealand had been in recession for three years, in fact, he said that by one common definition, New Zealand only entered recession in 2024.
That is a problem for Luxon because that would mean the recession was not a mutual Labour-National effort, but National’s alone.
Labour finance spokeswoman Barbara Edmonds asked Stephens whether New Zealand had been in recession for three years. Stephens said that New Zealand was “experiencing mediocre growth for a number of years and experienced a recession during 2024″.
Edmonds persisted, bringing up Luxon’s remarks on Morning Report and asking about the definition of a recession.
“A recession is a period when the economy experiences weaknesses, there are various definitions,” Stephens said.
“The technical definition is two quarters of negative growth, that’s the common definition,” he said.
By that definition, the most commonly used to describe a recession, Luxon would be wrong to describe the last three years as a recession. The economy grew, only shrinking in 2024. Luxon has a small bit of wriggle room as there were periods when Stats NZ data releases showed the economy in decline; however, Stats NZ later revised those figures to show small amounts of growth, with the economy only shrinking last year.
“There have been recent revisions to GDP data that have changed the profile of GDP data over the course of three years. Previous figures suggested roughly flat growth overall, the new figures suggest growth in 2022, 2023 and a decline in 2024,” Stephens said, noting that on a per capita basis, GDP declines had been sharp – although they still would not fit the three years of recession definition.
Edmonds asked again whether the economy had been in recession for three years.
“Not for the whole of the last three years,” Stephens said.
Luxon had Stephens’ remarks put to him on his way into the House on Wednesday. He softened his position slightly to “recessionary conditions”.
“We know what a technical recession is. Economists can debate that, but if you talk to Kiwis, we’ve been in recessionary conditions for a number of years.
Asked about the “three years” remark, Luxon said: “Well, we have been in recessionary conditions for the last few years.”
“With every statement of numbers, I get all that, statistically, you can debate that as much as you like, but outside of this of this place, New Zealanders are doing it tough,” Luxon said.
Luxon said there was a “lag effect with our numbers, they are constantly restated as we go through and get more data that adds into it, but whether you are in a technical recession or not, the reality is it has been a difficult time for New Zealanders”.
While Luxon is correct that GDP numbers come with a significant lag and are subject to revisions, the most recent revision actually revised upwards some of the growth that took place earlier.
Luxon is correct that there are several definitions of a recession, some, for instance, focus more on employment. While there are many ways of expressing the fact, there was a lot to be unhappy about in the economy from 2022 to 2025, there are no obvious definitions of a recession that would apply to that whole period.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
