New Zealand

The European Union signed a free trade agreement with New Zealand on Monday that the two sides expect will increase bilateral trade by up to 30% within a decade, the Associated Press reported. New Zealand will gain up to 1.8 billion New Zealand dollars ($1.1 billion; €1 billion) in exports to the 27-country bloc every year, a government statement said. The European Union signed a free trade agreement with New Zealand on Monday that the two sides expect will increase bilateral trade by up to 30% within a decade.

New Zealand slipped into recession as the economy shrank in the first quarter, data showed on Thursday, reducing the risk the central bank would need to hike interest rates further but creating a new headwind for the government's re-election hopes, Reuters reported. Gross domestic product (GDP) matched analysts' expectations of a 0.1% contraction in the March quarter but was well below the Reserve Bank of New Zealand's (RBNZ) forecast of 0.3% growth. Furthermore, fourth-quarter GDP was revised to a contraction of 0.7% from a decline of 0.6%.

New Zealand on Thursday announced a worse-than-forecast budget deficit as a slowing economy and a lower tax take hit its coffers, leaving the Labour government walking a tight rope as its spending plan is expected to fan inflationary pressures, Reuters reported. In his last budget ahead of what is set to be a close-run election in October, finance minister Grant Robertson announced billions towards rebuilding infrastructure following severe weather events at the start of the year and towards helping those struggling with increased living costs.

New Zealand’s international tourist sector disappeared overnight when the country became one of the first to seal its borders at the beginning of the COVID outbreak in early 2020. But since borders fully reopened in August, foreign tourists have been making their way back and are responsible for one of the main bright spots for an economy battling headwinds as a possible recession looms, Reuters reported.

New Zealand’s battle with inflation had shown signs of easing before Cyclone Gabrielle wrecked homes, downed power lines and washed away roads after making landfall earlier this month, the Wall Street Journal reported. Now, officials at the South Pacific country’s central bank are assessing how the rebuilding effort could complicate their campaign to bring price pressures under control.

Major insurers operating in New Zealand including Insurance Australia Group and Suncorp Group have cumulatively received over 9,000 claims so far following severe storms and flooding in and around the biggest city, Auckland, Reuters reported. As of Monday morning, Suncorp's Vero and AA Insurance brands have received about 3,000 claims, while IAG's AMI, State and New Zealand Insurance brands have fielded over 5,000 claims. Tower Ltd on Sunday said it had received over 1,000 claims since Friday, and noted losses were "substantial".

New Zealand’s economy grew more than twice as much as economists expected in the third quarter, underscoring the difficulty the central bank faces in trying to damp demand to curb inflation, Bloomberg News reported. Gross domestic product jumped 2.0% from the second quarter, when it gained an upwardly revised 1.9%, Statistics New Zealand said Thursday in Wellington. Economists forecast a 0.9% increase. From a year ago, the economy expanded 6.4%, exceeding the median estimate of 5.5%. The data are “stupendously strong,” said Nat Keall, an economist at ASB Bank in Auckland.

New Zealand's central bank on Wednesday hiked interest rates by a record amount and warned the economy might have to spend an entire year in recession to bring sky-high inflation under control. The Reserve Bank of New Zealand (RBNZ) raised the official cash rate (OCR) by 75 basis points to 4.25% and crucially now sees rates peaking at 5.5%, compared with a previous forecast of 4.1%. The central bank's overtly hawkish tone caught some traders off-guard, lifting the local dollar and sending swap rates higher, while its predictions of a recession also surprised.

Two of New Zealand's largest ski areas on Tuesday were placed into a type of bankruptcy proceeding following a disastrous winter season with barely any snow, the Associated Press reported. The Tūroa and Whakapapa ski areas, which are both owned by Ruapehu Alpine Lifts, entered what is called voluntary administration. The proceeding is open to failing New Zealand businesses and has some similarities to chapter 11 bankruptcy procedures in the U.S.