Economic activity rose 0.2% in the December 2025 quarter, at the lower end of expectations.
The Reserve Bank (RBNZ) had forecast growth of 0.5%.
Economists expected it to be between 0.2% and 0.4%.
The rise followed a 0.9% rise in the September 2025 quarter, Stats NZ said.
That third-quarter figure was revised down from the 1.1% reported in December.
On an annual average basis, GDP was up 0.2% to December 2025, compared with the year ended December 2024.
However, as a percentage change from the same quarter of the previous year, it was up by 1.3%.
“GDP has now risen in three of the last four quarters,” general manager and macroeconomic spokesman Jason Attewell said.
This is the first time since the year ended September 2024 that the economy has recorded annual growth.
The data highlighted that while the economic recovery continued into the fourth quarter of 2025, the economy was “still fragile” with private demand noticeably lacking from the equation, ASB senior economist Kim Mundy said.
Given the “shadow” 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.
“This is particularly the case given the weak starting point for private demand.”
Most industries recorded an increase in economic activity in the December 2025 quarter.
The primary sector led the growth with a rise of 0.9% for the quarter.
However, rental, hiring and real estate services were the largest contributors to the overall increase in GDP, up 0.8% in the quarter.
“Spending by overseas visitors to New Zealand increased in the December 2025 quarter, contributing to a 7.8% rise in travel services exports,” Attewell said.
“This flowed through to parts of the economy that service tourism, such as rental car hire, retail trade, and accommodation.”
Construction was the worst-performing sector – down 1.4%.
“The volume of building work put in place, a key input into how Stats NZ measures GDP, fell 3.1% in the December 2025 quarter,” Attewell said.
“This was driven by a decrease in non-residential building activity.”
Abhijit Surya, at Capital Economics, noted that the headline figure “may be overstating the weakness in the recovery, with unallocated taxes and the ‘balancing item’ knocking off about 0.26% points from growth”.
“It’s 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,” he said.
“Moreover, that uptick was broad-based, with all but two of the eleven services sub-sectors recording expansion.”
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.
Today’s data would only have a small impact on the RBNZ’s thinking, he said.
“For them, the forecast miss isn’t 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.”
Finance Minister Nicola Willis said the data confirmed the economy was growing at the end of last year.
“While 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,” she said.
But Labour finance spokesperson Barbara Edmonds said the growth figure showed “an economy going nowhere and no relief for New Zealanders doing it tough”.
“Growth of 0.2% is a long way from the ‘recovery’ Christopher Luxon and Nicola Willis keep talking about,” she said.
National had left New Zealand weaker and more exposed to global shocks, she said.
“In fact, the economy is smaller than when they took office.”
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.
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