New Zealand economy limps on with lacklustre GDP
New Zealand’s economy remains underwhelming, with 0.2 per cent growth in the final quarter of 2025 ahead of dark storm clouds.
The Q4 result, announced by Stats NZ on Thursday, was 0.4 percent, below market expectations and the RBNZ’s forecast of 0.5 percent.
The figures also confirm the huge political challenge facing Prime Minister Chris Luxon, who has devoted his fortune to boosting the Kiwi economy.
The center-right leader declared 2025 would be all about “growth, growth, growth” but Thursday’s announcement confirmed annual GDP growth was just 0.2 percent for the year.
ASB senior economist Kim Mundy said the recovery had not yet begun.
“The data shows that while the economic recovery will continue into Q4 2025, the economy is still fragile and private demand is noticeably missing from the equation,” he said.
New Zealanders have experienced one of the most challenging post-pandemic recovery periods among developed countries; activity and confidence have been crushed by long-term interest rate increases.
The RBNZ has since cut rates to stimulate activity, while unemployment is at an 11-year high at 5.4 per cent and inflation is on the rise again.
Consumer price index inflation is now outside the RBNZ’s target range of 3.1 per cent, while food price growth stands at 4.5 per cent.
There are widespread fears that inflation could worsen due to supply chain disruptions resulting from US-Israeli attacks on Iran.
If this happens, the RBNZ will find itself in the unfair position of considering interest rate rises that could crush the fledgling Kiwi economic revival.
“Growth both globally and in New Zealand could go south from here,” Kiwibank economist Sabrina Delgado said.
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