A leading independent economist says New Zealanders might not start to see improvement in the recent blows dealt to the country's economy until 2025.
Some experts are predicting the economy will be in a slump until early next year, with ASB's latest forecasts predicting the pressure of high inflation and interest rates were likely to remain until a turning point sometime next year.
ASB chief economist Nick Tuffley said the economy would likely dip in and out of recession for the rest of 2023.
It comes as thousands of New Zealanders continue struggling with an ongoing cost of living crisis. Though inflation is down from its peak, it remained at 6 percent year on year.
Asked about when New Zealanders might start to feel the economy growing again, independent economist Cameron Bagrie told AM GDP per capita - the country's economic growth divided by the population - wasn't expected to turn around significantly until 2025.
"People use the term 'slump', 'recession' - I don't like those phrases," he said. "What we're going through here is a big reset - what's going on is we've shifted out of our economic lane."
Bagrie said inflation had been "ruthless" and economic underperformance was needed to get it back to where it should be.
The Reserve Bank has added 525 basis points to the official cash rate since the end of 2021 in a bid to tame skyrocketing inflation. The central bank has since paused its tightening cycle for two consecutive meetings, pointing to easing inflation.
However, the bank's monetary policy committee "agreed that interest rates still need to remain at a restrictive level for the foreseeable future, to ensure annual consumer price inflation returns to the 1 to 3 percent target range while supporting maximum sustainable employment", it said in a statement last week.
With the "reset" well underway, Bagrie said it would take at least a couple of years to get New Zealand's economy back on track.
"I call it the 'reset', why? Because out of this reset, there's going to be a return to a little bit of normality.
"The past five - arguably 10 years - has been very abnormal in regard to… whether it be record-low interest rates, money printing, $70 billion worth of additional Government spending. That's not a normal economic environment."
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