New Zealand is driving towards recession, experts warn

The possibility of New Zealand going into recession is "rising by the day", an economist at one of the country's biggest banks has warned.

BNZ head of research Stephen Toplis said on Wednesday the chance of a soft landing for the economy was fading - and getting dangerously close to recession territory. 

"Our central forecast, currently, is that New Zealand's growth stalls completely in 2023," he said. "The danger is that the wheels well and truly fall off."

Milford Asset Management portfolio manager Will Curtayne agreed with BNZ's analysis.

"The risks are going up and it's not a good outlook, and it's grim news," he told AM.

Curtayne said one thing to blame for the outlook was the cost of living struggles. 

New Zealand inflation was running at 6.9 percent, while wages have only risen 3 percent. This gap means the average working Kiwi is going backward when it comes to the cost of living.

Curtayne told AM host Ryan Bridge people were having to spend more on essential items and less on other commodities, which was hampering economic growth.

"At the other end of the spectrum is the people that have been more fortunate to have a bit more money and own housing… house prices are now coming down as a result of the interest rates and the mortgage rates that have gone up.

"That means that those people that do actually have a bit more money may feel less wealthy with asset prices going down, and tighten their belts. This just does, unfortunately, lead to slower economic growth and [increases] the risk that we do actually dip into recession maybe next year."

The latest Gross Domestic Product figures showed New Zealand had achieved 3 percent growth in the December quarter, according to Statistics NZ. Those figures don't, however, reflect the Omicron outbreak and growth was widely expected to slide again in the next quarter.