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Highlights
- New Zealand’s economy moves out of recession with Q4 growth.
- Notable industry contributions from real estate, retail, and healthcare.
- Expenditure on durable goods shows a modest increase.
New Zealand has officially stepped out of recession as the country’s economic growth in the December quarter surpassed forecasts. The gross domestic product (GDP) increased by 0.7%, which was ahead of the expected 0.4% growth, indicating a resilient economic recovery.
This positive outcome is primarily attributed to strong performances in several key sectors. According to Stats NZ, 11 out of 16 industries saw an increase in GDP production. Notably, rental, hiring, and real estate services alongside retail trade and accommodation led the charge. The healthcare and social assistance sectors also contributed significantly to the economic uplift.
However, not all news was positive. The construction sector experienced a decrease of 3.1% in the December quarter, continuing a downtrend that started in March 2024. Additionally, the information media and telecommunications sectors faced declines, impacted by lower activity in telecommunications and internet services, as well as broadcasting and internet publishing.
On the expenditure front, the GDP rose by 0.8% during the quarter, rebounding from a 0.9% decrease in the previous quarter. Household consumption edged up by 0.1%, with a notable rise in spending on durable items like audio-visual and telecommunication equipment.
This economic turnaround follows a series of interest rate cuts by the Reserve Bank of New Zealand (RBNZ), which were implemented to stimulate demand and help inflation return to its target range. The RBNZ has also hinted at potential further rate cuts throughout the year, although the economic landscape remains challenging with flat housing market trends, increasing unemployment, and ongoing global trade tensions.
Stats NZ spokesperson Katrina Dewbery highlighted the impact of tourism on the economy, stating, "Higher spending by international visitors led to increased activity in tourism-related industries such as accommodation, restaurants and bars, transport, and vehicle hiring."
The latest GDP figures provide a snapshot of an economy in recovery, navigating through domestic challenges and global economic pressures. As New Zealand continues its economic path forward, the focus remains on sustaining growth across its diverse industries and managing external risks effectively.
