The looming recession could cut deeper than previously thought.

ASB is now forecasting the economy will shrink by about two-percent by early next year, double the contraction it was forecasting three months ago.

Former Reserve Bank economist Michael Reddell says its a plausible prediction.

He told Tim Dower every time the Reserve Bank tries to significantly reduce inflation, it's a recipe for recession.

Reddell says every time inflation has been brought down so quickly in the past, it's led to a recession, usually a severe one.

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