NZ Annual GDP Falls 0.6% in Q2, Missing Expectations

New Zealand’s economy expanded by 1.3% year-on-year in the three months to September 2025, marking its first annual growth in five quarters. This followed a 1.1% contraction in the previous period and was in line with expectations. The rebound was driven by a recovery in primary industries, led by strong growth in agriculture, forestry, and fishing (2.5%, up from 1.1%). The services sector also strengthened markedly, rising 1.6% compared with 0.3% in the second quarter, supported by solid gains in retail trade (3.5%), wholesale trade (3.3%), professional, scientific, technical and administrative services (3.1%), and public administration and safety (2.5%). Meanwhile, the goods-producing sector continued to contract but at a much slower pace (-0.9% versus -5.9%), with utilities posting robust growth of 4.4%. On a quarterly basis, the economy expanded by 1.1%.

New Zealand’s economy contracted by 0.6% year-on-year in Q2 2025, extending the 0.6% decline seen in the previous quarter and defying expectations of flat growth. The downturn was driven by a 4.7% drop in goods-producing industries (vs. -2.8% in Q1), with sharp declines in construction (-7.6% vs. -8%) and manufacturing (-3.2% vs. +2%). In contrast, service industries grew 0.5%, up from a 0.1% rise in Q1, while the primary sector inched up 0.1%, slowing from 0.5% growth previously. On a quarterly basis, GDP fell 0.9%, reversing a 0.9% expansion in the first quarter.

New Zealand’s economy contracted by 0.7% year-on-year in the first quarter of 2025, slightly better than market expectations of a 0.8% decline, following a 1.3% drop in the previous quarter. The annual downturn was mainly driven by a 3.1% contraction in goods-producing industries, though this marked an improvement from the 5.6% decline recorded in Q4. Service industries stagnated, posting no growth after a modest 0.1% rise in the prior quarter, while primary industries expanded by 1.7%, slightly up from 1.5% previously. Despite the annual weakness, the economy showed resilience on a quarterly basis, with GDP growing 0.8% in Q1, up from 0.5% in Q4. This marked the second straight quarter of quarterly growth, suggesting a gradual recovery is underway.