New Zealand’s economy has fallen into recession after the country’s central bank aggressively raised interest rates to a 14-year high.
Its gross domestic product (GDP) fell by 0.1% in the first three months of the year, official figures show.
That followed a 0.7% contraction in the previous quarter, which means the economy is in a “technical recession”.
The Reserve Bank of New Zealand (RBNZ) has increased the cost of borrowing sharply since October 2021.
New Zealand was one of the first countries to start raising rates in the wake of the pandemic and has outpaced the US Federal Reserve. Last month, the RBNZ increased its main interest rate to 5.5%.
People in New Zealand, who were already facing rising prices, are now feeling the impact of higher rates as mortgage repayments and the cost of other loans jump.
“Interest rates are crippling,” David Jordan, an Auckland-based web engineer told the BBC.
“I have seen many job losses in my industry as start-ups try to save money, though consultancies working with big global firms seem to be faring better,” he added.
Central banks around the world increased the cost of borrowing as they tried to curb price rises that were triggered as economies opened up after the Covid lockdowns.
Inflation was also driven higher by the rising cost of everything from fuel to food, due to the Ukraine war.