New Zealand’s economy grew 0.8% in the March quarter, marking solid momentum before Middle East tensions threatened to stall the recovery, according to official data released Thursday by Statistics New Zealand.
The quarterly growth rate matched economist expectations and came in line with a revised upward figure for the prior quarter, which grew 0.5% instead of the initially reported 0.2%. On an annual basis, the economy expanded 1.5% over the year to March 2026, and grew 0.8% on an annual average basis.
Manufacturing led the charge, rising 1.9% and contributing more in dollar terms than any other sector. Transport equipment, machinery, and food manufacturing drove the gains. Business services climbed 2.2% and wholesale trade jumped 2.4%, reflecting strength across the professional, scientific, and technical services sectors.
The March quarter marked the third consecutive quarter of growth for New Zealand’s economy. Nine of 16 industry groups posted expansion, signaling that the cyclical recovery was becoming more broad-based, according to ASB senior economist Kim Mundy. “Encouragingly, the growth drivers were more diverse in Q1 and suggests that a cyclical recovery was beginning to take shape,” Mundy said in comments reported by RNZ.
Construction activity fell 1%, with declines in both residential and non-residential building dragging on overall growth. Mining also contracted, reflecting falling oil and gas production. Per capita GDP rose 0.5% for the quarter, while the country’s purchasing power—measured by disposable income—climbed 0.6%, reaching 2.1% above year-ago levels.
The economy had entered early recovery after contracting in 2024 and posting weak growth through 2025. The OECD projects New Zealand’s growth will reach 1.4% for the full year 2026 and accelerate to 2.2% in 2027, supported by lower interest rates and resilient exports. However, economists now warn that momentum may have stalled in the June quarter. Salt Funds Management economist Bevan Graham forecast zero growth for the three months ended June, citing the impact of the Middle East conflict and energy price spikes that have weighed on business and consumer confidence over the past three months.
The Reserve Bank of New Zealand, which held its official cash rate at 2.25% last month, faces a balancing act: supporting the fragile recovery while raising rates to combat inflation driven partly by energy costs. ANZ chief economist Sharon Zollner told RNZ that stronger-than-expected growth may reduce the urgency for aggressive rate hikes, with the OCR expected to move toward the 3% neutral rate signaled by the central bank.
Sources
- RNZ — GDP growth figure, quarterly breakdown by sector, analyst commentary from Kim Mundy and Bevan Graham, Reserve Bank rate context
- Stats NZ — Official quarterly GDP data, annual growth figure, per capita and purchasing power metrics
- Trading Economics — Confirmation of 0.8% quarter-on-quarter growth and sector composition
- Focus Economics — Analyst commentary on recovery momentum
- OECD — 2026 and 2027 growth projections
