New Zealand’s economy grew by 0.8% in the first quarter of 2025, according to data released by Statistics New Zealand on Thursday, reflecting signs of early recovery following last year’s recession.
The figure marked an improvement from the revised 0.5% growth in the fourth quarter of 2024. It slightly exceeded economist expectations of a 0.7% increase. Despite the quarterly rebound, GDP remained lower compared to a year earlier.
According to Bloomberg, growth was primarily supported by stronger farming output and increased manufacturing activity. Statistics New Zealand reported that the key drivers of the first-quarter expansion were farming and manufacturing. Manufacturing rose 2.4%, while goods exports climbed 3.6%, led by gains in primary products.
The Reserve Bank of New Zealand (RBNZ) has taken a more accommodative monetary stance in recent months. The official cash rate (OCR) has been lowered by 225 basis points since August 2024, bringing it to 3.25%. While this has supported recovery, the RBNZ signalled in May that it might pause further cuts in its upcoming July review.
“With the economy regaining its footing sooner than expected after last year’s sharp downturn, we continue to expect that the RBNZ will take the opportunity to pause and assess the situation at its July OCR review,” said Michael Gordon, senior economist at Westpac in Auckland.
Some analysts remain cautious about the pace and sustainability of the rebound. “Repair of the economy is underway but significant risks are apparent,” said Nick Tuffley, chief economist at ASB Bank. “Data since March suggest a sizable deceleration in economic activity. Geopolitical deterioration in the Middle East presents upside risks to inflation and therefore pricing behaviour.”
The Treasury also noted that annual growth remains subdued. Treasury chief economist Dominick Stephens stated that while recent data has been weak, he still expects growth to pick up in 2025.
The rise in GDP per capita, up 0.5% from the previous quarter, marked the second consecutive quarterly increase after two years of decline. Despite this, sectors such as tourism showed contraction, underlining the uneven nature of the recovery.
The New Zealand dollar remained relatively stable following the GDP announcement, trading at 60.29 US cents. Meanwhile, two-year government bond yields increased by two basis points to 3.44%.
The RBNZ and government officials are expected to monitor inflation, consumer demand, and external trade dynamics closely as they determine the next steps for economic policy heading into the second half of the year.
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