A prominent economist says New Zealand is "pretty much" already in recession.
It comes after a new business confidence survey found almost three-quarters of businesses expected the economy to deteriorate in the coming year.
On top of that, recruiters have said job listings were down 27 percent from this time last year - signalling New Zealand's record-low unemployment rate could be coming to an end.
Throw rising interest rates into the mix as well, all things were pointing towards recession - something the Reserve Bank (RBNZ) late last year admitted to purposely engineering to take demand out of the economy and bring red-hot inflation down.
"I think we're pretty much in recession already," economist Shamubeel Eaqub told Newshub Late on Tuesday. "Already, before Christmas, we had seen that business and consumer confidence was extremely low.
"We saw through the Christmas period that people weren't spending quite as much as we would have expected them to, given how much pent-up demand there was in the lead-up to Christmas."
The RBNZ and Treasury both agreed New Zealand would plunge into a technical recession this year, with the latter projecting the country's economy to contract 0.8 percent across three quarters.
Those projections caused consumer confidence to take a dramatic tumble to their lowest-ever levels in a Westpac December survey.
Eaqub said 2023 was going to be tough for the economy.
"For all intents and purposes, I think the recession has begun but worse is still to come because, for those who have mortgages, we know they're going to be refinancing at much higher rates - going from between 2 and 3 percent a couple of years ago to between 6 and 7 this year."
But it wasn't all bad news. While it might take some time, Eaqub said New Zealand's red-hot inflation rate should start to reduce.
Global economic demand was also subsiding, he said.
"The big risk for this year was very much around whether we would see big increases in wages and labour costs and, given how weak the business sentiment is - given that businesses are looking to hire far fewer people than we had seen last year - it's very unlikely that big increases in wages are going to happen this year."
And, as a result, Eaqub expected inflation would come off by the end of the year - but not before some economic pain.
"We've had lots of disruption in the last couple of years but, surprisingly, we've had a very strong economy - but all the positives are now turning around and we're starting to slow down, and it looks like it's going to be really painful in 2023."
New Zealand's economy initially fared well in the COVID-19 storm, before being gripped by labour shortages and rising inflation last year.