New Zealand GDP Growth Holds Firm at 0.1 Percent

New Zealand's gross domestic product is expected to expand by 0.1 percent in the June quarter. This figure exceeds the previous estimate of a 0.1 percent contraction. It also surpasses the Reserve Bank of New Zealand's projection of flat growth. According to GN markets/growth (en-US), the economy weathered the oil shock better than initially feared.

Kiwibank economist Elliot Lowe described the June quarter as difficult for businesses and households. He noted that the fragile recovery from late 2025 was disrupted by soaring oil prices. However, he sees evidence that the September quarter is setting the stage for a renewed recovery later this year. The annual growth rate is projected at 2.2 percent from June 2025 to June 2026.

Primary Sectors Drive Resilience

ASB expects growth to be concentrated in primary and goods-producing sectors. These industries are typically more fuel-intensive, a significant factor during energy price spikes. Robust global demand for exports helped offset the higher input costs. The construction sector also contributed positively, benefiting from a low base effect in the previous period.

Westpac senior economist Michael Gordon projected a 0.2 percent rise in GDP for the June quarter. He stated that the economy weathered the oil shock better than hoped. Sectors such as construction, wholesaling, and agriculture continued to benefit from supportive factors. These include still-low interest rates and strong demand for key exports.

Household Spending Faces Pressure

Retail spending, particularly on hospitality, suffered the most visible impact from the conflict. Higher fuel prices squeezed household budgets directly. BNZ senior economist Doug Steel noted question marks around consumer-focused sectors like retail trade. While retail sales volumes are higher than a year ago, inflationary pressure slowed annual growth in the second quarter.

ANZ economists also picked 0.1 percent growth for the quarter. Matthew Galt noted that the stall in activity was likely temporary. High-frequency activity indicators have improved since the peak of the disruption. ANZ card spend data suggests that the pull-back in travel spending was short-lived.

Monetary Policy Outlook Remains Cautious

Westpac suggested that stronger-than-forecast GDP could assuage committee concerns about downside risks. However, the Reserve Bank will likely focus on upcoming inflation data for its next move. ANZ economists continue to forecast a 25 basis point hike in the Official Cash Rate in October. This call carries less conviction than before the September monetary policy statement.

BNZ warned that quarterly GDP data is often volatile. Significant revisions are expected when the official figures are released. Steel advised that the annual result provides a better sense of recent developments. The annual pick of 2.4 percent growth serves as the major point of comparison for analysts.