Economy recovers in Q3 2025

GDP reading: New Zealand's GDP expanded 1.1% on a seasonally adjusted quarter-on-quarter basis in Q3, following a 1.0% contraction in the previous quarter. The reading was more than double the growth forecast by the Central Bank. However, the economy remains slightly smaller than it was at the end of 2023.

Broad-based improvement: Compared with the prior quarter's data, figures in Q3 improved for government consumption (+1.3% in quarterly terms vs +0.2% in Q2), fixed investment (+3.2% vs -1.3% in Q2), exports of goods and services (+3.3% vs -0.9% in Q2) and imports of goods and services (+2.5% vs +1.1% in Q2). In contrast, the reading for private consumption softened in Q3 (+0.1% vs +0.3% in Q2). On a year-on-year basis, economic output expanded 1.3% in Q3, following a 1.1% contraction in the prior quarter.

Panelist insight: On the reading and outlook, United Overseas Bank’s Lee Sue Ann said: “Despite a stronger-than-expected rebound in 3Q25, GDP is still below 2024 levels. We expect growth to improve from ~0.3% in 2025 to 2.2% in 2026, supported by lower rates, household spending, and resilient exports, though global trade uncertainty will weigh on momentum.” ANZ’s Matthew Galt said: “Historical revisions have not materially changed the profile of GDP, which continues to show a deep economic slump since 2024 with high quarter-to-quarter volatility. For the RBNZ, the main takeout will be the upside surprise to Q3 growth, which will have absorbed a portion of the spare capacity in the economy. Given recent quarter-to-quarter volatility, our take is that about half the strength in Q3 is signal while the rest is noise. We suspect the RBNZ will view it much the same way.”

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