New Zealand economy weaker than expected in second quarter, contracts 0.9%

By Lucy Craymer

WELLINGTON (Reuters) -New Zealand’s economy shrank more than expected in the second quarter as heightened uncertainty around U.S. tariffs and ongoing weakness in the housing market weighed.

Official data out on Thursday showed gross domestic product (GDP) fell 0.9% in the second quarter from the prior quarter, worse than analysts’ and the Reserve Bank of New Zealand’s forecast of a 0.3% fall.

“The 0.9 percent fall in economic activity in the June 2025 quarter was broad-based with falls in 10 out of 16 industries,” Statistics New Zealand economic growth spokesperson Jason Attewell said. “GDP has now fallen in 3 of the last 5 quarters.”

It followed a revised 0.9% increase in the first quarter from 0.8%.

Annual GDP decreased 0.6%, Statistics New Zealand data showed. The market had expected it to remain unchanged.

New Zealand sank into a technical recession in the September quarter of last year, and its economy grew slowly in the fourth quarter of 2024 and the first quarter of 2025.

Ongoing spare capacity in the market is expected to reinforce the central bank’s stance that it needs to cut the cash rate by 25 basis points twice more this year.

In August, it forecast two more rate cuts this year as it flagged spending by households and businesses has been constrained by uncertainty, falling employment, higher prices for some essentials and declining house prices.

(Reporting by Lucy Craymer; Editing by Jamie Freed)