An analysis of the drivers of the business cycle was published in the Bank’s March Bulletin while a discussion of monetary policy over the business cycle will be published in the Bank’s June Bulletin in a few weeks. In summary, that analysis notes that the New Zealand’s economy expanded from 1998 to 2007 and then had a six quarter recession in 2008–09.
From 1998 to 2007 there were a number of significant shocks that determined the shape of the business cycle (figure 2). First, there was a strong and unexpected increase in population growth from net immigration in 2002/03. Second, there was a significant boost to the economy from a rising terms of trade from 2000, which accelerated late in the period.