That distinction matters — an economy with modest but broadening momentum, hit by a supply-side shock, is a different environment to one running hot, and it shapes how aggressively the RBNZ is likely to respond.
A recovery that was broader than expected
The breadth of the March quarter recovery is what makes the data significant, even if it is now dated. Growth was not concentrated in one sector — manufacturing rose 1.9%, wholesale trade expanded 2.4%, retail trade and accommodation grew 1.2%, and business services added 1.1%. Investment in plant, machinery, and equipment jumped 5.5%, with Turcu noting that computing and technology purchases were a notable driver, suggesting early signs of AI-related capital expenditure flowing through the data.
The drag came from construction, which fell 1% for the second consecutive quarter and sits 3.8% lower on an annual basis. Residential investment fell 3.1% over the quarter, and private consumption rose only 0.5%, constrained by a soft labour market and subdued house price growth.
What the GDP result means for the OCR
This data captures a three-month window that closed before the Middle East conflict began, and the picture since has shifted considerably.
NZIER continues to forecast the RBNZ will begin raising the OCR in July, with a follow-up hike in September — a view shared by ASB, which “still favours a July start to OCR hikes and a 3.25% OCR peak by year end.” A move from the current 2.25% to 3.25% would represent 100 basis points of additional tightening, with mortgage rates expected to follow that trajectory higher across most fixed terms.