On an annual average basis, GDP was up 0.2% to December 2025, compared with the year ended December 2024.<\/p>\n
However, as a percentage change from the same quarter of the previous year, it was up by 1.3%.<\/p>\n
\u201cGDP has now risen in three of the last four quarters,\u201d general manager and macroeconomic spokesman Jason Attewell said.<\/p>\n
This is the first time since the year ended September 2024 that the economy has recorded annual growth.<\/p>\n
The data highlighted that while the economic recovery continued into the fourth quarter of 2025, the economy was \u201cstill fragile\u201d with private demand noticeably lacking from the equation, ASB senior economist Kim Mundy said.<\/p>\n
Given the \u201cshadow\u201d now being cast by the Iran conflict and oil price shock, the risks to the growth outlook were clearly skewed to the downside, Mundy said.<\/p>\n
\u201cThis is particularly the case given the weak starting point for private demand.\u201d<\/p>\n
Most industries recorded an increase in economic activity in the December 2025 quarter.<\/p>\n
The primary sector led the growth with a rise of 0.9% for the quarter.<\/p>\n
However, rental, hiring and real estate services were the largest contributors to the overall increase in GDP, up 0.8% in the quarter.<\/p>\n
\u201cSpending by overseas visitors to New Zealand increased in the December 2025 quarter, contributing to a 7.8% rise in travel services exports,\u201d Attewell said.<\/p>\n
\u201cThis flowed through to parts of the economy that service tourism, such as rental car hire, retail trade, and accommodation.\u201d<\/p>\n
Construction was the worst-performing sector \u2013 down 1.4%.<\/p>\n
\u201cThe volume of building work put in place, a key input into how Stats NZ measures GDP, fell 3.1% in the December 2025 quarter,\u201d Attewell said.<\/p>\n
\u201cThis was driven by a decrease in non-residential building activity.\u201d<\/p>\n
Abhijit Surya, at Capital Economics, noted that the headline figure \u201cmay be overstating the weakness in the recovery, with unallocated taxes and the \u2018balancing item\u2019 knocking off about 0.26% points from growth\u201d.<\/p>\n
\u201cIt\u2019s worth noting that the services sector grew at a healthy pace of 0.7% q\/q in the fourth quarter, with momentum little changed from the quarter before,\u201d he said.<\/p>\n
\u201cMoreover, that uptick was broad-based, with all but two of the eleven services sub-sectors recording expansion.\u201d<\/p>\n
Smoothing through the quarterly volatility and technical issues, the economy had shown moderate growth on average over the second half of 2025, although a little weaker than the RBNZ had been assuming, ANZ economist Matthew Galt said.<\/p>\n
Today\u2019s data would only have a small impact on the RBNZ\u2019s thinking, he said.<\/p>\n
\u201cFor them, the forecast miss isn\u2019t large enough to prompt a major rethink. However, at the margin, weaker-than-expected GDP gives them a little more latitude to look through the near-term inflationary impact of the oil shock and focus on the potential medium-term implications.\u201d<\/p>\n
Finance Minister Nicola Willis said the data confirmed the economy was growing at the end of last year.<\/p>\n
\u201cWhile GDP data was volatile throughout 2025, the New Zealand economy picked up noticeably in the second half of the year, growing 1.1% over the final six months after being relatively flat over the first half of the year,\u201d she said.<\/p>\n
But Labour finance spokesperson Barbara Edmonds said the growth figure showed \u201can economy going nowhere and no relief for New Zealanders doing it tough\u201d. <\/p>\n
\u201cGrowth of 0.2% is a long way from the \u2018recovery\u2019 Christopher Luxon and Nicola Willis keep talking about,\u201d she said.<\/p>\n
National had left New Zealand weaker and more exposed to global shocks, she said.<\/p>\n
\u201cIn fact, the economy is smaller than when they took office.\u201d<\/p>\n
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.<\/p>\n