Economists at the country's biggest banks are neatly divided as to whether the economy has or has not gone into recession, but there's great consensus that things are slowing and that our current account deficit's very big

ASB economists are inviting us to "place your chips on the roulette wheel of growth" as they assess the prospects for March quarter GDP figures to be released on Thursday (June 15).

Economists at the Big Five NZ banks are, quite unusually, neatly split on where the GDP figures will land - IE plus or minus - demonstrating how volatile and uncertain the economic climate is.

Westpac's economists say the economy shrank 0.4% in the March quarter, BNZ's economists say it was -0.2%, ASB reckon +0.1% and ANZ +0.2%. Kiwibank? Right down the middle, with 0.0%.

Depending on where the roulette ball lands either New Zealand is now in a 'technical recession' or it isn't. A technical recession is if we get two consecutive quarters of contraction - and the economy shrank 0.6% in the December quarter.

In ASB's Economic Weekly, chief economist Nick Tuffley says the GDP outcome is "very much on the knife-edge".

"...The volatility, measurement challenges and frequent historical revisions mean it is anyone’s guess what side of 0 the figure will be. Put your chips on red or black, spin the wheel and close your eyes," he says.

Tuffley adds, however that "focusing so narrowly" on whether or not NZ has gone into recession is to "miss the broader picture".

"If we don’t have a recession, it will only be because of the sudden flood of people entering NZ, something that seemed far-fetched a year ago when NZ’s border was being prised open.

"On a per-capita basis, GDP is set to shrink around 2% in this downturn: that’s 2% less spending or output per person. Besides the recession around the Global Financial Crisis (4.2% fall in per-capita GDP), you have to go all the way back to the early 1990s for a bigger knock.

"The point is, it feels like a recession in many respects because a large number of people are feeling sustained financial pressure."

Tuffley says ASB's forecasts don’t have per capita GDP recovering to its September 2022 level for nearly three years - although he concedes that forecast might rapidly change when the figures come out on Thursday. It took five years for per-capita GDP to recover from the GFC-led 2008-09 recession.

Kiwibank chief economist Jarrod Kerr and senior economist Mary Jo Vergara say in Kiwibank's First View publication that "it looks like the Kiwi economy managed to dodge a (technical) recession over the summer period – but only by the narrowest of margins".

"...Given the significant uncertainty over the quarter, with significant weather disruptions, we could easily see a print coming in well above, or well below, our 0.0% pick. What's important is the outlook. And the outlook is soft at best."

BNZ senior economist Craig Ebert in the weekly BNZ Markets Outlook also thinks the bigger picture is the most important thing. He says even if March quarter GDP averts the statistical fate of a technical recession, "it will be hard to deny the economy is, more generally, on a cooling trajectory - one that will take heat out of inflation".

"That’s the point we’d want to emphasise, not the finer points of quarterly GDP measurement."

Ebert says the fact that Q1 GDP growth was "probably something close to zero" is certainly reflected in the market polls.

"The Bloomberg variety has a median expectation of -0.1%, in a range of - 0.4% to +0.2%. Notably, the extremes of this range are represented by local analysts, not a local/overseas split, like there had been for prior GDP reports."

Before the GDP figures come out on Thursday, we will get - on Wednesday - the March quarter Balance of Payments (BOP) data.

Ebert says the BOP accounts "will show an enormous current account deficit" – annually nudging up to 9.0% of GDP.

"...That’s if we’ve got Q1, and historical revisions, about right. Also watch these accounts for the global reinsurance estimate that will register as a credit, related to the recent storm events, plural."

ASB's Tuffley says the current account figures "will definitely have big negatives plastered all over them".

"We expect the annual deficit to linger at or above 9% of GDP over 2023. It’s been a marked change from running a 1% deficit in 2020, and now means NZ is running the dreaded twin deficits: current account and fiscal. Together, they point to the private sector (and public sector) needing to save more and spend less, in order to help rebalance the economy."