Independent economist Cameron Bagrie says there will be "no free lunch" as ASB predicts the potential recession could be deeper and more prolonged than originally thought.
The Reserve Bank last year predicted its engineered recession would see the economy contract by 1 percent over 12 months from April.
But on Tuesday, ASB bank predicted the economy would contract about 2 percent by early next year.
Bagrie told Newshub the "dreaded r-word is doing the rounds more and more".
"The Reserve Bank's projecting it, Treasury, the same. ASB and others are going to jump on the bandwagon."
Inflation is up around 7 percent, and Bagrie said the Reserve Bank has a mandate to keep it around 2 percent. He told Newshub it will require a "pretty big economic adjustment" to bring demand back in line with supply, and "unfortunately" this will result in less growth.
Bagrie said a range of economic forecasters say Aotearoa's economy will have to "get beaten up quite severely" over the next 12 to 24 months to get inflation back to suitable levels.
However he believes the economic adjustment is going to be more protracted and take place over a two to three-year period.
"At the moment we've got a big mismatch between the two, so demand is going to have to falter, to be weaker over the coming two years," he said.
"I think there's a lot of inflationary pressure out there. It's going to take some time to get that inflationary pressure out of the system.
"Unfortunately, there is no free lunch. Inflation's a problem and the bitter medicine on the other side in regards to containing inflation is not exactly that friendly either."
