New Zealand's economy grew faster-than-expected in the first quarter, firming up the recovery from last year's recession and giving the central bank more time to consider when it needs to cut interest rates again.
Gross domestic product (GDP) rose 0.8% in the March quarter from the previous three months, Statistics New Zealand data showed on Thursday. That was faster than analysts' forecasts for a 0.7% increase and the Reserve Bank of New Zealand's forecast for 0.4% growth.
It followed a 0.5% increase in the fourth quarter, which was downwardly revised from 0.7%.
The growth will provide some relief for policymakers keen to put the economy back on a solid footing after it sank into technical recession last year. The two-quarter GDP decline was the worst since the sharp downturn of 1991, excluding the pandemic.
"With the economy regaining its footing sooner than expected after last year’s sharp downturn, we continue to expect that the RBNZ will take the opportunity to pause and assess the situation at its July official cash rate review," Westpac senior economist Michael Gordon said in a note following the data.
On a year-on-year basis, GDP decreased 0.7%, a slightly smaller fall than the forecast 0.8% decline.
New Zealand's central bank has cut the official cash rate by 225 basis points since August 2024 to 3.25% and in May foreshadowed at least one more cut this year, flagging economic risks from global trade disputes.
Markets were little moved by the release of the data with the New Zealand dollar unchanged at $0.6028.
"At a more detailed industry level, nine of the 16 industries increased, with the largest rises in business services and manufacturing," Statistics New Zealand economic growth spokesperson Katrina Dewbery said in a statement.
Statistics New Zealand added the largest decreases were seen in arts and recreation services, and information, media, and telecommunications.
