New Zealand Q1 GDP Expected to Show 0.9% Growth Before Iran Shock
New Zealand's March quarter GDP is forecast to rebound sharply, but economists warn the Middle East conflict will weigh heavily on future output.
New Zealand's first-quarter GDP figures, due Thursday, are poised to deliver one of the stronger growth readings in recent memory — yet the data may already be obsolete as a guide to the economy's actual trajectory. The median market forecast calls for quarterly expansion of 0.9%, a marked acceleration from the 0.2% recorded in the December quarter, even as annual growth is expected to ease slightly to 1.1% from 1.3% due to a favorable base period a year earlier.
The breadth of the anticipated rebound is genuine. Manufacturing stands out as a primary driver, boosted by robust milk collections, a recovery in fruit and wine production, and elevated machinery activity. Wholesale trade, professional services, retail, and tourism are all expected to have contributed positively. The main counterweight is construction, where both residential and non-residential building activity is estimated to have contracted roughly 3.5% during the quarter — a reminder that the recovery was uneven even before external shocks entered the picture.
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A technical caveat complicates the headline number. Westpac estimates that Statistics New Zealand's seasonal adjustment methodology adds approximately 0.4 percentage points to March quarter results, implying that underlying growth is probably closer to 0.6%. That distinction matters for policymakers trying to read the economy's true pulse rather than its seasonally amplified signal.
The more pressing analytical question is forward-looking. The Iran conflict, which intensified through late February and March, is expected to leave a far more visible imprint on June quarter data. At least one major bank is already projecting a 0.3% contraction in Q2, effectively framing Thursday's release as the high-water mark before a period of meaningful stress — a starting position rather than a destination.
The GDP print also lands as the sole significant data point ahead of the Reserve Bank of New Zealand's July 8 cash rate review. The RBNZ held its benchmark rate at 2.25% in May following a three-to-three committee split, signaling that a tightening cycle is approaching. While a large surprise could shift the committee's balance, most economists believe the RBNZ will weight forward-looking inflation indicators more heavily than backward-looking activity figures when deciding its next move. Continue reading at Forexlive.
