New Zealand’s economy grew 0.8% in the first three months of the year.
The figure for the March quarter was up on an upwardly revised 0.5% gross domestic product (GDP) figure for the December 2025 quarter. This revision was due to information coming through from Statistics NZ’s building activity survey, and was largely driven by agriculture.
The 0.8% figure for the March quarter is below the Reserve Bank’s 1% projection.
On Thursday, Stats NZ said the measurement of GDP in the March quarter was not heavily impacted by the Middle East conflict and late-quarter fuel price increases.
“We are monitoring the suitability of our usual methods for accurate measurement of GDP for future GDP releases where the level of activity in various segments of the economy might be significantly impacted by the Middle East conflict and elevated fuel prices.”
Stats NZ general manager and macroeconomic spokesperson Jason Attewell said GDP rose 0.8% in the March quarter and annual growth in GDP was also up 0.8%.
Nine out of 16 industries recorded an increase in economic activity in the March quarter.
The size of the economy was $450 billion for the year ended March 2026.
Before Thursday’s GDP announcement, economists from the major banks had forecasts ranging from a 0.7% to a 1% rise, while as mentioned above, the Reserve Bank (RBNZ), in its May Monetary Policy Statement, projected 1%.
In the lead up to the GDP release, BNZ senior economist Doug Steel said despite the GDP data having a “sense of being old news” because it covers January to March, it would still set the “starting position” for the economy.
Manufacturing the largest contributor
For the March quarter, manufacturing was the largest contributor to the overall increase in GDP, up 1.9%.
Attewell said; “New Zealand’s manufacturing industry is a large and diverse sector of the economy, making up around 8.0% of GDP.”
The rise in manufacturing activity was led by a 4.0% increase in transportation equipment, machinery, and equipment manufacturing, and a 1.7% rise in food, beverage and tobacco manufacturing.
Business services was up 1.1% and wholesale trade was up 2.4% - both were also contributors to the increase in GDP in the March quarter.
The increase in business services was due to a 1.4% rise in professional, scientific and technical services, while the rise in wholesale trade was due to a jump in machinery and equipment wholesaling.
Mining, however, was the largest downward contributor to GDP this March quarter, falling 11.6%. This drop was due to a decrease in oil and gas extraction.
Construction, which was the largest downward contributor in the December quarter, was also down in the March quarter - falling 1.0%.
“Declines in both residential and non-residential building contributed to the overall fall in construction activity in this period.”
Per capita up 0.5%, expenditure rises 1.0%
GDP per capita was up 0.5% in the March quarter – in the previous quarter, it was flat.
The expenditure measure of GDP rose 1.0% in the March quarter, following a 0.4% increase in the December quarter.
While gross fixed capital formation had an average annual decline of 0.2%, it jumped 2.0% in the March quarter.
Businesses invested more in physical fixed assets in the March quarter with increased expenditure on plant, machinery and equipment, which was up 5.5%. This was supported by imports of related capital goods increasing 9.4%.
Spending on residential and non-residential building work fell in the March quarter, down 3.1% and 3.4% respectively.
“Reduced spending on residential and non-residential building work was reflected in the fall in construction activity in the March 2026 quarter," Attewell said.
Central government final consumption expenditure jumped 1.4% and local government final consumption expenditure increased 2.2% in the March quarter.
Household consumption expenditure was up 0.5% in the March quarter. In the previous quarter, it was down 0.1%.
This rise in the March quarter was driven by increased spending on audio-visual equipment, used motor vehicle and grocery foods. It was also driven by spending on services such as imputed rents, cultural services and miscellaneous services.
Exports were up 3.1% for the quarter, driven by dairy products (up 4.7%), other food, beverages and tobacco (up 2.0%).
Imports were up 4.2% due to imports of capital goods and imports of consumption goods.
Real purchasing power rises in March quarter
Compared to the December quarter, real gross national disposable income was up 0.6% and real gross national disposable income per capita jumped 0.4%.
When it comes to the 12 months to the March quarter, annual real gross national disposable income rose 2.1% and real gross national disposable income per capita was up 1.4%.
Real gross national disposable income measures the volumes of goods and services that New Zealand residents command over – so, real purchasing power of the country’s disposable income, according to Statistics NZ.
This is also impacted by changes in trade, NZ’s net investment income and net transfer flows with the rest of the world.
With real gross national disposable income, Stats NZ said NZ’s ability to buy good and services was up 0.6% in the March quarter.
This was due to an increase in net transfer flows, a decrease in terms of trade and net investment income on our international investments had increased.
In the March quarter, export prices fell 2.7% and import prices dipped by 0.7% leading to a decrease in the terms of trade.
The decrease means need more exports are needed to pay for a given volume of imports and residents can buy fewer goods and services by volume from the income generated from a given level of domestic production, according to Statistics NZ.
Having a 0.6% increase real gross national disposable income along with a 0.3% population increase over the March quarter led to an increased real gross national disposable income per capita by 0.4%.
In the year to March, real gross national disposable income increased 2.1% while real gross national disposable income per capita rose 1.4%.
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