Economists are picking at least one further quarter of economic contraction after figures confirmed New Zealand remained in recession during the first three months of this year.
Gross Domestic Product - a measure of the economy's output - has now shrunk for five consecutive quarters, according to figures issued on Friday.
It is the first time the economy has contracted for five quarters row since GDP figures started being compiled on a quarterly basis in 1986.
The latest figures were at the most pessimistic end of forecasts, matching the 1% contraction in the final three months of last year.
ANZ-National Bank economists say the recession will last at least into the current quarter, and the economy is unlikely to begin growing again until later in 2009.
Economist Philip Borkin says the latest figures point to further job losses. He says firms are running down inventories to meet demand from customers and this is costing jobs.
Manufacturing hardest hit
The slowdown was felt most in manufacturing, which shrank by 7.2%, as companies cut production and met customer demand from inventories.
Spending by households fell by 1.4%, the biggest quarterly fall since 1991, as people curtailed spending on big-ticket items such as cars, appliances and furniture.
Construction was the only non-services-related sector to expand production in the quarter, thanks to spending on roads, rising 0.4% after four consecutive quarters of falls.
On an annual basis, the economy decreased 1%, the first yearly decline since 1992. When comparing the March quarter to the same period a year ago, the economy shrank 2.7%.
