NZ Economy Surges with 0.8% Growth, Outpaces Forecasts in Early 2025

New Zealand’s economy has outperformed expectations with a stronger-than-anticipated 0.8% growth in the first quarter of 2025, according to fresh data released by Stats NZ. The result, which doubled previous growth forecasts from both Treasury and the Reserve Bank, has been welcomed as a sign of mounting economic resilience amid global uncertainty.

Finance Minister Nicola Willis hailed the result as “great news for workers, families and businesses,” and noted it is the second consecutive quarter in which economic growth exceeded official forecasts — a trend she says signals a turning point for the country’s economic trajectory.

“This confirms the economy was gaining momentum late last year and at the start of this year,” said Willis. “While global conflict and the introduction of new tariffs present challenges, these numbers show that New Zealand is getting back on track.”

GDP Growth Defies Headwinds: Highest Per Capita Increase Since 2022

In addition to topline GDP growth, the nation’s Gross Domestic Product per capita rose by 0.5% in the March quarter — the largest quarterly increase since September 2022. This follows a prolonged slump, with eight straight quarters of stagnant or declining per capita output.

“This is a clear sign that not only is the overall economy growing, but individuals are seeing more economic output and income as a result,” said Minister Willis. “That’s a welcome shift after a difficult period for many.”

Macroeconomic Indicators Turning Positive

The recent data arrives amid a general improvement in New Zealand’s macroeconomic indicators:

• Inflation has been trending downward, easing pressure on household budgets.

• Interest rates, which have been elevated to combat inflation, are beginning to soften, allowing for lower borrowing costs.

• Disposable income is beginning to rebound, giving many families a bit more financial breathing room.

Willis attributes the positive direction to the Government’s economic stewardship, particularly its focus on cutting wasteful spending and restoring investor and consumer confidence.

“I know many households and businesses are still doing it tough,” she acknowledged. “But the steps the Government has taken to stop wasteful spending, grow the economy, and provide more support to households are paying dividends. So are the efforts of the private sector.”

Business and Export Sectors See Gains

The growth is also being propelled by several key sectors:

• Retail and hospitality have benefited from increased domestic spending and a recovery in tourism.

• Agricultural exports — led by record outputs from farmers and growers — are contributing significantly to GDP.

• Private sector investment has seen a slight uptick, buoyed by government initiatives to reduce regulatory burdens and stimulate business activity.

Minister Willis noted that “money is flowing through to business tills” as a result of consumer confidence and targeted policy reforms. These include deregulatory measures, investment incentives, and trade promotion strategies.

Government's Economic Approach: Turning the Page on Prior Mismanagement

Willis did not mince words when contrasting the current economic results with the prior administration’s record, stating the last six years were marked by “economic mismanagement that fuelled inflation, discouraged investment, and ratcheted up prices.”

The Minister reaffirmed the Government’s commitment to fiscal discipline, low inflation, and policies that enhance productivity and resilience across all sectors of the economy.

Looking Ahead: Stability with Cautious Optimism

Despite the upbeat economic indicators, Minister Willis emphasized the need for ongoing vigilance given the uncertain global environment, which includes the rise in international conflict and protectionist trade measures that could affect export flows.

“While today’s results are encouraging, we must remain cautious and agile,” she said. “We will continue to support households and businesses, while ensuring New Zealand remains a safe and attractive place to live, work, and invest.”