New Zealand June Quarter GDP Forecast Revised to Positive Growth
Major New Zealand banks have upgraded their economic outlook, projecting a 0.2% expansion for the June quarter instead of a contraction. This shift follows strong performance in construction and wholesale trade despite earlier concerns over energy costs.
Westpac NZ and BNZ now forecast New Zealand gross domestic product to grow by 0.2% in the June quarter. Both institutions previously predicted a contraction of 0.1% and 0.2% respectively. The data is scheduled for release on Thursday. This revision marks a significant improvement in sentiment compared to early summer projections.
The Reserve Bank of New Zealand expects a flat result for the same period. The central bank cited second-round demand effects from geopolitical conflict as a headwind. They estimate these factors reduced quarterly growth by approximately 0.6% compared to a baseline scenario. Fuel prices and lower real incomes were identified as primary contributors to this drag.
Sectoral data drives forecast upgrade
Recent statistics from Statistics NZ prompted the banks to change their views. Construction activity increased by 4.8% for housing and non-residential work in the June quarter. Wholesale trade volumes rose by nearly 3% on a quarterly basis. Annual growth in this sector exceeded 8%.
The primary sector also demonstrated resilience. Milk production grew by 2.3% on a seasonally adjusted basis. Manufacturing showed strong gains in food processing, dairy, and meat products. These positives offset weakness in textiles, printing, and chemical manufacturing. The overall goods-producing sector remained a key driver of economic stability.
Oil prices impact economic stability
Brent crude oil prices have fluctuated significantly due to Middle East tensions. The benchmark peaked at 126.41 US dollars per barrel in late April. Prices recently reclaimed the 100 US dollar mark, reaching 108 US dollars on Friday. This is the first time prices have been this high since May.
Westpac economist Michael Gordon noted the economy has shaken off the initial shock. He attributed this resilience to low interest rates and strong export industries. The bank’s forecast change reflects better-than-expected business financial data. The US-Iran conflict initially threatened to cause a historic global energy shock.
Future growth projections remain modest
The Reserve Bank projects 0.5% growth for the September 2026 quarter. They expect another 0.5% increase in the December quarter. BNZ economist Doug Steel described the current outlook as having a positive hue. He noted the data remains relatively subdued but avoids negative territory.
GN markets/growth (en-US) reports that the March quarter saw 0.8% growth. This was slightly below the Reserve Bank’s 1% projection. The economy was not heavily impacted by late-quarter fuel price increases at that time. Analysts now monitor how sustained energy costs affect future consumption and investment patterns.
