New Zealand’s economy returns to growth in third quarter
Businesses services were the largest contributor to the increase in GDP
[WELLINGTON] New Zealand’s economy returned to growth in the third quarter, confirming early indications of improvement in momentum from an extended period of weak activity and low confidence.
Official data out on Thursday showed gross domestic product rose 1.1 per cent in the third quarter from the prior quarter, better that analysts’ forecast of 0.9 per cent growth and the Reserve Bank of New Zealand forecast of 0.4 per cent growth.
It followed a revised quarterly 1.1 per cent contraction in the second quarter. Annual GDP rose 1.3 per cent, Statistics New Zealand data showed. This is in line with market expectation.
“The 1.1 per cent rise in economic activity in the September 2025 quarter was broad-based, with increases in 14 out of 16 industries,” said Jason Attewell, economic growth spokesperson at Statistics New Zealand.
New Zealand’s economy has struggled since slipping into recession last year, contracting in three of the last six quarters with confidence down and unemployment on the rise.
In an extended effort to shore up growth, the Reserve Bank of New Zealand cut the official cash rate by 275 basis points since August last year, including by a quarter percentage point in November when it also signalled an end to the easing cycle.
The central bank expects the cash rate to remain on hold at 2.25 per cent throughout next year as policymakers are of the view that the economy is on the mend and are wary of inflation rearing its head again.
Thursday’s GDP outcome supports the central bank’s stance that further cuts are not needed.
While the markets have moved to price in the chance of rate hikes next year, new RBNZ Governor Anna Breman pushed back against those bets this week and stressed that rates would likely remain low through the year.
Statistics New Zealand added that businesses services were the largest contributor to the overall increase in GDP and were up 1.6 per cent in the quarter. REUTERS
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