Summarised by Centrist
New Zealand’s economy grew 0.8 percent in the March quarter, twice the pace forecast by the Reserve Bank, prompting speculation that interest rate cuts could pause as early as July.
The result ends an extended downturn, but economists warn the recovery remains fragile and uneven.
Stats NZ data showed household consumption rose 1.4 percent, with higher spending on services, durable goods and essentials.
Manufacturing and business services led the gains, driven by a lift in machinery and equipment production. Nine of sixteen measured industries posted growth.
Despite the headline result, annual GDP still shrank by 0.7 percent. ASB economist Wesley Tanuvasa called the bounce “a repair underway,” but warned of mounting risks, including slowing global demand and geopolitical volatility.
Post-March data already point to a deceleration.
With inflation still muted and spare capacity in the economy, ANZ economist Matthew Galt said it will take a sustained period of elevated growth to bring New Zealand back to trend. The RBNZ has lowered rates over the past year, but has recently signalled that any further cuts will be data-dependent.
Tanuvasa described the outlook as a “tightrope walk,” citing growing stagflation risks. The economy may be growing again on paper, but weak annual figures and global uncertainty suggest the recovery is far from secure.
