New Zealand's economy could avoid a further decline in growth in Q1, therefore sidestepping a technical recession, say ANZ economists.

According to the bank's most recent Truckometer, there was a 4.6% rise in light traffic in March compared to February, a seven-month high, whilst the heavy traffic index rose 2.7%.

Chief economist at ANZ Sharon Zollner stated the figures had to be taken with a degree of caution due to the impact of lockdowns as well as recent floods and Cyclone Gabrielle, RNZ reports.

"Overall, the data can be characterised as consistent with consumer spending cooling as RBNZ (Reserve Bank of New Zealand) rate hikes continue to bite," Zollner stated.

The measure of light traffic gives an indication of consumer spending, whilst the heavy traffic index involves economic production.

"Over the March quarter, the heavy traffic index was up 1.1%, on the face of it suggesting an upside risk to our expectation that the economy eked out modest growth of 0.2% quarter on quarter following the weakness in the fourth quarter," she added.

In addition, in the fourth quarter of last year, New Zealand's economy contracted by a surprise 0.6%, the RNZ report goes on to add.

The decline stemmed from a fall in the manufacturing, exports and retail sectors.

"A fall in transport equipment, machinery, and equipment manufacturing corresponded to lower investment in plant, machinery, and equipment," Stats NZ senior manager Ruvani Ratnayake said at the time. Reduced output in food, beverage, and tobacco manufacturing was reflected in a drop in dairy and meat exports."

The ANZ chief economist continued: "So far, heavy traffic is not showing anything like the sharp declines seen in the global financial crisis."

She said should New Zealand's economy contract in Q1, it would highly likely be "noise" surrounding supply-side and weather effects.

"That doesn't mean a recession isn't coming ... we are forecasting the 'real' recession to start in the third quarter of this year," she stated.