File photo. Photo: RNZ/ Marika Khabazi
Whether or not the economy slipped into recession at the start of the year is about to be revealed.
Data on gross domestic product (GDP), the broad measure of economic growth, is expected to have edged lower in the three months ended March.
Following the previous quarter's 0.6 percent contraction, a second consecutive quarter of negative growth would meet the technical definition of a recession.
It comes after figures out on Wednesday showed the country's balance of payment deficit unexpectedly fell to $33 billion for the year ended March.
But the country is still living well beyond its means and filling the gap by borrowing, resulting in a wonky economy.
Westpac senior economist Michael Gordon said the blowout in the current account deficit over the last two years was down to a loss of export earnings from overseas tourists, coupled with a surge in imported goods prices and shipping costs.
"The overarching issue, though, is that New Zealanders have not adjusted their spending patterns to reflect this trade shock," he said.
"Monetary and fiscal stimulus in response to Covid-19 left the economy overheated, as demonstrated by the extremely tight labour market and the surge in inflation.
"There are limited avenues for boosting our export earnings from here, so bringing the current account deficit back to levels that are more sustainable over the long term will require a reduction in our spending on imports."
Gordon said tighter monetary policy from the Reserve Bank was already curbing spending on imports, though it would take some time.
He expected today's economic figures, which will be out at 10.45am, would show another contraction, of 0.4 percent, meaning the country had been in recession - though he said looking at the labour market may provide a better measure of how the economy was doing.
Stats NZ figures in May showed the unemployment rate was at 3.4 percent, near historic lows.
"I think the turn has happened to some degree, but looking at it, in absolute terms, it's still a pretty tight labour market and that's a symptom of an economy that's still running at pretty hot levels," Gordon said.
"So there's still quite a way to go in terms of that battle to bring inflation back down to something that's low and stable."