New Zealand, which is known as the sixth largest island in the world and where about 52 lakh people live, is facing an economic recession. The country's GDP growth has fallen by 1% in the July-September 2024 quarter. This is the second consecutive quarter when GDP growth has been negative. Earlier, a decline of 1.1% was also recorded in the April-June quarter.

First recession since 1991

This is the first time since 1991 that New Zealand is stuck in an economic recession. However, the Corona epidemic has been kept aside from these figures. This period of economic recession has increased the risk of inflation and unemployment in the country.

Reasons behind the recession

New Zealand's Finance Minister Nicola Willis has cited inflation as the main reason. She says that rising inflation has badly affected consumer spending. At the same time, she has also raised questions on the policies of the Central Bank. Continuous increase in interest rates and reduction in spending have worsened the situation.

What can happen now?

Economic analysts believe that interest rates in New Zealand can be cut significantly to boost consumer spending. Along with this, the government needs to adopt new economic policies.

Impact on currency and stock market

New Zealand's currency was also not untouched by this recession. The New Zealand dollar has fallen to its lowest level in 2 years at $0.5614. The stock market has also registered a decline, which has weakened the confidence of investors.

Signs and effects of economic recession

Decline in GDP: A decline in GDP for two consecutive quarters confirms a recession.
Unemployment: Companies lay off employees to reduce costs.
Decrease in demand: People spend less due to reduced income, which leads to a decline in demand and production.
Decline in inflation and investment: Rising inflation or falling prices affect the profits of companies.

The challenge ahead

New Zealand needs strong economic policies to overcome the recession. The situation can be improved only by controlling inflation and unemployment. However, this time can prove to be a big challenge for New Zealand.