After the central bank of New Zealand aggressively increased interest rates to a 14-year high, the country's economy entered a recession.
In the first three months of the year, its gross domestic product (GDP) decreased by 0 points 1 percent, according to official data.
The economy is now in a "technical recession" because that came after a -0.7% contraction in the previous quarter.
Rates have increased significantly by the Reserve Bank of New Zealand (RBNZ) since October 2021, reaching a 14-year high.
In the wake of the pandemic, New Zealand raised interest rates among the first nations, and it has since outpaced the US Federal Reserve in doing so. The RBNZ raised its benchmark interest rate last month to 5.5 percent.
The impact of higher rates is now being felt by many New Zealanders, who were already dealing with rising prices due to higher mortgage repayments and other loan costs.
Global central banks raised borrowing costs in an effort to contain price increases brought on by economies opening up following the Covid lockdowns.
Because of the Ukraine war, prices for everything have increased, including food and fuel.
Cyclones Hale and Gabrielle, as well as teacher strikes, had an adverse effect on New Zealand's economy in the first three months of this year.
"The unfavorable weather events brought on by the cyclones contributed to falls in horticulture and transport support services, as well as disruptions in education services," said Jason Attewell, general manager of economic and environmental insights at Statistics New Zealand.
When the economy contracts for three consecutive quarters, this is referred to as a technical recession.
The RBNZ previously indicated that it had no further plans for rate hikes. The contraction increases the likelihood that the central bank won't raise interest rates again in the near future.
