New Zealand Q2 GDP Growth Beats Estimates

New Zealand’s economy grew 0.2% qoq in Q2 2026, above forecasts of 0.1%, but slowing from an upwardly revised 0.9% expansion in Q1 and marking the weakest growth since Q2 2025. GDP growth was mainly driven by goods-producing industries, which rose 1.3%, supported by construction (2.7%), electricity, gas, water, and waste services (0.5%), and manufacturing (0.4%). Meanwhile, service industries grew 0.2%, led by higher output in public administration and safety (2.0%) and information (1.7%). In contrast, primary industries contracted 0.3%, weighed down by mining activities (-0.4%) and agriculture, forestry, and fishing (-0.3%). On the expenditure side, exports rose 3.3%, while imports fell 0.8%. Meanwhile, private consumption stalled, while government spending fell 1.7%. Gross fixed capital formation also grew, mainly supported by an increase in residential buildings (4.4%). Year-on-year, GDP advanced 2.6%, after an upwardly revised 1.7% growth in Q1 and surpassing estimates of 2.3%.

The economy of New Zealand advanced 0.8% quarter-on-quarter in Q1 2026, accelerating from an upwardly revised 0.5% growth in Q4 2025 but falling slightly short of forecasts of 0.9%. GDP growth was mainly driven by service industries, which rose 0.5%, supported by wholesale trade (2.4%), retail trade and accommodation (1.2%), professional, scientific, technical, administrative, and support services (1.1%), and transport, postal, and warehousing services (1.0%). Meanwhile, goods-producing industries grew 0.4%, due to higher activity in the manufacturing sector (1.9%). In contrast, primary industries contracted 0.5%, weighed down by mining activities (-11.6%). On the expenditure side, private consumption and gross fixed capital formation each grew 1.6%, while government spending expanded by 1.5%. Meanwhile, exports and imports rose 3.1% and 4.2%, respectively. Year-on-year, GDP expanded 1.5%, matching the revised figure in Q4 and surpassing market estimates of 1.1% growth.

New Zealand’s economy remains closely tied to Middle East developments, Reserve Bank Governor Anna Breman said, adding that a quicker resolution to the conflict could unlock stronger growth this year. After holding the cash rate at 2.25%, she noted that earlier cuts continue to filter through, supporting activity. With early-year momentum, the economy is well-positioned, if external risks ease. Data showed a pickup in January and February, though tensions weighed on sentiment in March and are expected to dampen April. Breman stressed that uncertainty remains high, with the conflict’s duration and severity the key swing factor. Beyond oil prices, supply disruptions will shape near-term growth and inflation. A swift de-escalation could lower fuel costs and boost confidence, while a prolonged conflict risks sustaining strains and elevated inflation. The RBNZ’s pause reflects this balance, giving policymakers time to assess global risks while keeping a bias to act if pressures intensify.