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Economist Brian Easton crunches the recent March quarter GDP data

Public Policy / opinion
Economist Brian Easton crunches the recent March quarter GDP data

This is a re-post of an article originally published on It is here with permission.

The takeaways from the just released data are:

1. Any estimate of GDP is subject to error.

2. The 0.2 percent decrease in the March 2022 quarter is not precise and will be revised, with the mild likelihood that it will eventually be higher.

3. New Zealand has no ‘official' definition of a recession.

4. The New Zealand economy seems to be stagnating. Whether we are in a recession (or going into one) or it is something more structural we cannot yet tell.

Statistics New Zealand recently published its preliminary estimate of GDP for the March 2022 quarter. The headlines were that it showed a 0.2 percent fall from the previous (December 2021) quarter. There was a rush to say that New Zealand was in ‘recession’. Then everyone moved on, leaving the recession interpretation lurking. Few even noticed the data refers to the March 2022 quarter; because the middle of the quarter is February 2022, it was describing events, in effect, four months ago.

Instant commentary works well for headlines, but sober analysis does not leap to conclusions. However, sober analysis is very boring. Sorry that this column is going to have to be too. But you do deserve a more thoughtful response, even if it is boring. Here is some analysis.

Any estimate of GDP is subject to error.

We are not sure how big the error is. (It may be at least 0.2 percent for a quarterly figure.) A major source of the error is the sheer difficulties of getting the quality underlying data. Unfortunately, the smaller the economy, the less likely such collection errors are to average out. (Another source of noise is that the figures are seasonally adjusted in order to enable comparisons which are less influenced by the regular seasonal variations over the year. The exercise is more complicated that Stats101. I wasted much time in my youth studying the issue – even published a paper in Econometrica on it. For instance, sometimes Easter is in the March quarter, sometimes it is in the June quarter. Sigh.)

The estimate is a preliminary one and subject to revision.

Were SNZ to wait for all the base data to come in before publishing, we would be waiting a long time. The latest report says that it was still gathering material for as far back as December 2020 (perhaps even further) and that quarter’s figure has been revised. If you are concerned about the delays, why not complain to the Minister of Statistics that his department is underfunded (copy to the Minister of Finance)?

The revisions are quite marked. Analysing the last six SNZ releases gives an average absolute revision (that is, ignoring the sign/direction of the revision) on the previous release’s estimate of 0.4 percentage points. Sometimes they go up, sometimes they go down. Allowing for sign, the revisions have averaged an increase of 0.05 percent. Over the longer period they can cumulate. The December 2020 figure just released is 2.0 percent higher than the first estimate released in March 2021.

Even if you found the previous paragraph tricky, you should have got the idea that the 0.2 percent decrease identified in the last press release is not precise and will be revised, with the mild likelihood that it will eventually be higher.

New Zealand has no ‘official’ definition of a recession.

The commentariat says there is an official definition of ‘recession’. There is not even a widely agreed informal definition. If you ask the relevant agencies – Reserve Bank, Statistics, Treasury – they will say (politely) that there is not one.

The commentariat often claims that a GDP falling for two successive quarters defines a ‘recession’ (‘officially’). The definition comes from the United States following a massive research program; there has been no similar such study here. The research was not based simply on GDP but on a multitude of economic indicators including business and consumer confidence, the state of the labour and housing markets and business investment.

Every country is different, not only because of differences in the quality of their data, but because their economy is different. You don’t think that Chinese economists, whose economy was until recently chugging along at a 10 percent increase a year, wait for two quarters of negative growth before they hit the ‘concern’ button? A mere 5 percent annual growth rate worries them (and Mr Xi even more).

The tendency for the commentariat to adopt American thinking uncritically is one of the persistent dangers we face. It is so pervasive, one is surprised that sports commentators do not interpret rugby in terms of gridiron. That may be indicative of why we are good at rugby.

So What is Happening?

The short answer is that if you are certain about what is happening to the New Zealand economy then you have not been following; the surer you are, the more certain we can be that you are wrong. (This is particularly true when there is a major disturbance like Covid.)

My tentative guess is this. Since recovering for the primary impact of Covid, the economy has been growing either very slowly or it has been stagnating. There are not a lot of industrial sectors that are growing strongly while there are number which seem to be in decline or stagnating. I’ve tabulated my best guesses:


  • Electricity, gas, water, and waste services

  • Healthcare and social assistance

  • Professional, scientific, technical, admin, and support

  • Public administration and safety

  • Rental, hiring, and real estate services

  • Transport, postal, and warehousing

  • Wholesale trade

Stagnating to Mildly Falling

  • Information media and telecommunications

  • Financial and insurance services


  • Arts, recreation, and other services

  • Construction

  • Education and training

  • Manufacturing

  • Mining

  • Retail trade and accommodation

I also looked at the estimates of GDP measured on the expenditure side of the economy. They show a smaller fall in the March 2020. There are strong increases over recent quarters in general government expenditure, and gross capital formation. (Also for imports of goods and services, which means we are sourcing more spending domestically, thereby boosting output.) However, private consumption expenditure – the biggest expenditure item – is declining and exporting is doing even worse. (It cant be just tourism is low; it was already depressed by Covid.)

Make what you want of the list. (Other’s lists are slightly different). Ask the commentariat for anecdotes. I can see stories but I am uneasy about drawing analytic conclusions, with one exception. The overall the data suggests that the New Zealand economy has had some recovery since the Covid impact, but it is sluggish – near stagnating. Many of the more up-to-date indicators of its state suggest it is losing steam.

Whether we are in a recession (or going into one) or it is something more structural we cannot yet tell.

A boring conclusion really, hardly the headline stuff the commentariat feed on.

*Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian. He was the Listener economic columnist from 1978 to 2014. This is a re-post of an article originally published on It is here with permission.

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I'd say at this point all this noise about a recession is doing more to create one than the RBNZs moves. 

Also agriculture seems absent from the list of industries.


Absolutely agree. I'm also sick and tired of headlines telling us that everyone is heading to Australia. I am optimistic about the future here in NZ.


Annual current account continues to widen

In the year ended March 2022, the annual current account deficit was $23.3 billion (6.5 percent of gross domestic product (GDP)). This compares with $20.3 billion for the year ended 31 December 2021 (5.8 percent of GDP).

The largest annual current account deficit prior to the COVID pandemic was $14.7 billion in the December 2008 year during the global financial crisis (7.8 percent of GDP).


I don't think you actually read the article you linked. As you imply it is disproving recession, which it is not.

"The current account deficit was $1.9 billion wider than the previous quarter, mainly due to an $871 million rise in the value of goods imports"


Data might not have caught up with what's happening outside my window today.


Don't leave us hanging.....


the sun is shining, the birds are singing


Classic so we suddenly do not have a definition of a recession so we can never be in one. Pretty sure the accepted measure is 2 or 3 quarters in a row of negative growth is a recession. If we are not already in one it's coming.


Isnt the term 'recession' taken to be a bad thing? Its interesting how something - that should be more frequent - that is good for us all in the medium to long term is sold by many as such a terrible event.

For many people the primary issues are currently inflation, jobs and overpriced house/rental prices. So for us in NZ a 'recession'  will sort these issues..there will be less consumer spend (reduced inflation), less jobs (optimised employment market so better business growth.. for the right businesses) and coming from those events and the ocr drop we will get a decent house price drop which has too many social and business benefits to list.

So a recession will surely be an indicator that the ocr rise is working and we are finally able to redirect the economy to a more productive, inclusive and better one for our kids future.

Better yet less tax and more focus ..  might force a focus on government spending and even better a change of government.

The only tricky thing is balancing the impact of the recession on certain important industries (not housing , immigration and construction) and then redirecting the economy and our national satrategy (hopefully a decent leadership option will crop up)

Lets all hope for a balanced and managed recession and all do our bit and take a bit of short term pain for long term gain. 





A recession is the financial world's laxative ...

... the system needs a good cleansing ... flushing out the excesses .... empty the bowels despite the howls ... we'll feel so much relieved when it's all over ... and out ...


Unless you’re American you technically don’t. Or did you not read the article?


Indeed. What is a recession? And is it a good or a bad thing? The answer is currently beyond my pay grade, although I wouldn't mind a decent clean up of all the s...t around the place.


Do you know any politician bold enough to put a line in a sand to declare a recession?

We are in an actual recession... based on the sector patterns you just noted above

Look at the Fidelity market cycle guide to the S&P Chart, the growing sectors you note are Healthcare, Energy, Consumer non cyclicles, and 10. Utilities which is actually defensive in a recession

Transport is a covid anomaly as the costs went up 300% due to port issues, and now they are facing record high fuel prices caused by massive money printing