Caution over the future of the economy, despite recent growth

Stats NZ has released its quarterly GDP figures, showing a 0.2% bump in the December 2025 quarter. 

This followed a 0.9% rise in the previous, and three out of the last four quarters have seen growth. 

Infometrics Chief Economist Brad Olsen believed the latest figures showed progress had slowed. 

“The figures highlight that yes, the New Zealand economy has been growing, but that growth was a bit sluggish towards the end of last year—up just 0.2% coming off a stronger 0.9% rebound in the September quarter.”

“We know that again the results are still patchy. Not all parts of the economy are still firing.”

For example, construction saw the biggest decline, down 1.4% and $61 million dollars in GDP production in the quarter. 

Olsen believed it was due to a decrease in non-residential building activity, which had seen a 5.1% decline.

He said higher interest rates and a ‘sluggish economy’ meant businesses had not wanted to go and build. 

Another sector showing decline was business services, down $27 million dollars in production. 

This fall was also attributed to a lack of confidence. Olsen said businesses were not going out for as much support or thinking about expanding.

However, it was not all bad, with most industries recording growth.

“Rental, hiring, and real estate services was the biggest [rise], up 0.8%.”

“We also saw an increase in overseas spending, a 7.6% increase in that spending supporting international tourism services.”

However, the oil shocks from the war in Iran have made the future uncertain.

“We think that there is that potential that the economic recovery does continue, but is going to be knee-capped to a degree... slowed back because of that oil price shock, both limitations on doing work and also having to pay higher prices to do whatever work continues,” Olsen said.

“No one's quite sure how long this… will go on for, and for businesses, that means that a lot of them aren't sure how to respond.”

Image of Brad Olsen, supplied.