ASB says the technical recession may be over, but other major banks disagree

Is New Zealand out of a technical recession and what difference would that make?

Major banks have released their predictions ahead of the release of GDP data next week and none of it is great reading.

A technical recession is where the economy shrinks for two successive quarters and Westpac is picking we are heading for a third with GDP dropping another 0.2 percent. It's joined by BNZ which believes the economy shrank 0.1 percent.

Those banks are at odds with ASB which thinks the economy will grow by a miserly 0.1 percent, and ANZ and the Reserve Bank which have both pegged GDP to expand by 0.2 percent.

If they are correct, New Zealand's economy will raise its head just above the threshold of a technical recession.

However, ASB noted in its report that "we don't expect this to mark a change of fortunes for NZ" and that Kiwis will be left "with an even smaller share of the economic pie".

The bank said that's because productivity per capita is expected to remain particularly weak.

ANZ agreed and said that GDP per capita is likely to contract for a sixth successive quarter.

"For context, per capita GDP contracted for seven consecutive quarters following the Global Financial Crisis," the bank stated.

All the banks are hedging their predictions.

In its economic note the BNZ said: "We wouldn't rule out the possibility of a small positive in the quarter. But the main message remains of the economy struggling to grow."

On that point they all agree.

ASB said there's a "reasonable degree of uncertainty around this number, as has been the case with recent GDP prints".

Westpac's report stated that after the economy overheated "it's likely we're only just moving into 'cool' territory" and ANZ believed the GDP data will "provide further confirmation that underlying economic momentum is weak" and said the economy is "bouncing along the bottom".