The New Zealand economy narrowly escaped recession in the three months to March 31, but like Australia, activity remains very weak as it continues to be affected by high interest rates.
The economy grew by 0.2% in the three months to the end of March, taking the country out of the shallow recession experienced during the second half of 2023.
That was stronger growth than in Australia, where GDP rose by just 0.1% in the same period.
The 0.2% GDP rise reported by Stats NZ on Thursday followed a 0.3% drop in the September quarter and a 0.1% dip in the three months to December.
Annual GDP growth in Australia was much stronger than in New Zealand in the year to March—1.1% (still weak) compared to just 0.3%.
However, growth was patchy, and economic activity has now fallen for 18 months on a “per capita” basis, which takes into account population growth, and is now down 2.4% over the year on that measure.
That’s similar to Australia, where per capita GDP has also fallen for 15 months and was down 1.5% in the five quarters to March.
It was only the second quarter of expansion in the economy since early 2021, but it was largely in line with the expectations of the Reserve Bank of New Zealand and a touch stronger than what New Zealand economists had expected, which was quarterly growth of 0.1% and 0.2% in annual terms.
While the economy has returned to growth, it is expected to continue to struggle and won’t get any help from the RBNZ, which has signaled a need for high interest rates to continue for now due to stubborn inflation pressures.
New Zealand’s population grew a further 0.5% in the first quarter, which helped drag the economy out of its final half-year slump in 2023.
There were a range of results at the industry sector level, with eight of the 16 industries measured expanding in the three months to the March quarter, Stats NZ said.
Rental, hiring, and real estate services expanded by 0.9% in the first quarter, while electricity generation drove a 2.9% quarterly increase in electricity, gas, water, and waste services, the data showed.
However, activity in construction, business services, and manufacturing all contracted over the quarter.