Former Finance Minister Roger Douglas is calling for Finance Minister Nicola Willis to resign - but she says their solution is not needed.
He and University of Auckland Matthew Abel chair of macroeconomics Robert MacCulloch said the contraction in GDP revealed by Stats NZ on Thursday was because Willis was "sending New Zealand bankrupt by failing to get to grips with our ballooning fiscal deficits and public debt".
"Her own Treasury contradicts her claim that NZ is on a path to surplus. It is not. Treasury's long term fiscal forecasts show out-of-control deficits due to pensions and health-care spending from an ageing population," they said in a statement.
"Willis is not up to the job and is not levelling with the New Zealand public."
Willis said Prime Minister Christopher Luxon had confidence in her to keep growing the economy. She said she had spoken with Luxon about his confidence in her ability to hold the finance portfolio.
MacCulloch said Willis kept saying the country was returning to surplus.
"The books are not improving. And this surplus she talked about today, that's a creative accounting trick. She changed the way the accounts were being measured... she keeps saying they're getting better, it's not true."
The Stats NZ data showed the economy shrank more sharply than expected in the June quarter, down 0.9 percent.
It is a longer and sharper downturn than that experienced in the global financial crisis.
Willis blamed the slump on global turmoil and uncertainty driven by the United States' tariff roll-out.
"The economy had been growing strongly in the previous six months, but suddenly had the stuffing knocked out of it," Willis said.
"I feel for people and businesses who have been affected."
Willis stressed that the data was "backwards-looking" and there were signs the economy was growing again as interest rates fell.
Economists agreed that the outlook for the third quarter was better, but said given the sharp contraction, activity was still lower than had previously been expected.
MacCulloch said it was disingenuous to blame the global picture.
"She mentioned the tariffs hitting much harder here - that makes no sense at all. In fact, most countries overseas had far higher tariff uncertainty than New Zealand."
Willis told RNZ she would not take up the pair's advice.
"Sir Roger and Professor MacCulloch want me to immediately slash government spending. I'm not going to do that.
"International evidence is that reducing deficits is best done over the course of several year. That is what the government is doing. We are on course to return the books to surplus in 2028/29."
Labour's deputy Carmel Sepuloni said Australia's economy grew 0.6 percent over the same period.
"Where to next, you know? Is it the fault of the butcher, the baker, the candlestick maker, but not Nicola Willis? It's her responsibility - she's the minister for finance."
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