GDP growth records fastest upturn since Q2 2023 in the first quarter

GDP reading: GDP growth accelerated to 0.8% on a seasonally adjusted quarter on quarter basis in the first quarter, up from 0.5% in the fourth quarter of last year and marking the fastest increase since Q2 2023.

Broad expansion: Looking at expenditure components, household spending growth improved to 1.3% seasonally-adjusted quarter-on-quarter in the first quarter (Q4 2024: +0.1% s.a. qoq). Public spending growth moderated to 1.1% in Q1 (Q4 2024: +1.6% s.a. qoq). Moreover, fixed investment bounced back, growing 0.6% in Q1, contrasting the 0.3% decrease in the prior quarter. On the external front, exports of goods and services increased 0.1% on a seasonally adjusted quarterly basis in the first quarter, which was below the fourth quarter's 3.4% expansion. Finally, imports of goods and services growth waned to 0.4% in Q1 (Q4 2024: +1.1% s.a. qoq). The expansion was also broad-based when looking at industrial components, with agriculture, mining, construction, manufacturing and services activity all rising in Q1 vs Q4.

Momentum unlikely to hold: Our Consensus is currently for a slowdown in the rate of GDP growth in Q2, and available monthly data supports that picture.

Panelist insight: On the data and outlook, ANZ’s Matthew Galt said: “Today’s data suggests the economy started the year started with more growth momentum and a marginally less-negative output gap than the RBNZ has been assuming (with downward revisions to the previous quarter providing some offset). This raises the odds of a pause in the easing cycle in July, and that’s very much the market’s view. However, the New Zealand economy continues to operate with considerable spare capacity, keeping core inflation restrained. It will take a period of elevated growth to get things back to par, whereas recent weakness in some high-frequency activity indicators suggests a meaningful step-down in growth could be in store in Q2.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects New Zealand GDP projections for the next ten years from a panel of 23 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable GDP forecast available for New Zealand GDP.

Download one of our sample reports to visualize what a Consensus Forecast is and see our New Zealand GDP projections.

Want to get access to the full dataset of New Zealand GDP forecasts? Send an email to info@focus-economics.com.