WHAT WAS CLAIMED
New Zealand has been in a recession for three years.
OUR VERDICT
False. The NZ economy has not been in a continuous recession for the last three years.
AAP FACTCHECK - New Zealand has not had "three years of recession" despite a claim made by Prime Minister Christopher Luxon.
Gross Domestic Product (GDP) figures show the NZ economy has not been in a continuous recession in the last three years.
Mr Luxon made the claim during his first speech to parliament for 2025.
"We don't have the luxury to turn off growth after three years of recession that Labour created", he said.
He later repeated the claim on Radio New Zealand, saying "I can tell you New Zealanders are really wanting economic growth after three years of a recession" (four minutes 39 seconds).
Mr Luxon's office did not respond when AAP FactCheck asked for evidence supporting his claim.
When pressed by local media, Mr Luxon appeared to soften his position, saying "Well, we have been in recessionary conditions for the last few years," according to the New Zealand Herald.
Robert MacCulloch, an economics professor at the University of Auckland, said Mr Luxon's original claim was "incorrect" and "an exaggeration".
He said the widely known technical definition of a recession is two consecutive quarters of negative GDP growth.
Figures from Stats NZ show positive growth across the quarters of June 2022, September 2022, June 2023, December 2023 and March 2024, as well as in annualised figures for the last three years.
Prof MacCulloch said NZ was thought to be in recession across the December 2022 and March 2023 quarters, under the previous Labour government, though Stats NZ data was later revised to show the December 2022 quarter flatlined.
The data also showed NZ was in a recession in the June and September quarters of 2024.
For every other quarter in the last three years, the NZ economy was either growing or flatlining.
Prof MacCulloch said there hadn't been one continuous recession, rather that the economy has been "in and out" of recessions.
"New Zealand's been in recession the last six months. But if you look at those numbers, we haven't been in recession the last three years", Prof MacCulloch told AAP FactCheck.
The recession NZ experienced across the June and September 2024 quarters was sharper than the drop in GDP experienced in March 2023 when the former Labour party was in power, he noted.
The NZ Treasury's chief economics advisor Dominick Stephens also disagreed with the notion of a "three-year" recession.
Labour MP Barbara Edmonds asked him if the economy had been in a recession for the last three years during a Finance and Expenditure Committee hearing in January (51 minutes 38 seconds).
"Not for the whole of the last three years," Mr Stephens replied.
While two consecutive quarters of negative growth is the most widely accepted, there are other definitions of recession.
The Reserve Bank of Australia explains economists can take various factors into account, including per capita GDP, levels of household spending and unemployment.
Dr Eric Crampton, chief economist at The New Zealand Initiative, said NZ's economic performance over the last three years was not consistent with any definition of recession.
He said NZ had experienced a rise in unemployment "albeit from an utterly unsustainably low base" coupled with declining per capita GDP in the three years.
The output gap - the difference between the actual output of an economy and its potential - was largely positive, he said, while GDP growth rates only turned negative in the last two quarters.
He said he thought Mr Luxon was probably speaking "colloquially" about the general economic conditions.
"But I would not describe a period with a strongly positive output gap as being consistent with a recession of any definition," he concluded.
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