New Zealand’s Gross Domestic Product YoY came in at -0.60%, missing the zero-growth estimate and matching the previous quarter’s contraction. This unchanged reading from June, though improved from March’s -1.10%, signals ongoing economic contraction but at a moderating pace. Looking ahead, the Reserve Bank of New Zealand is likely to maintain its cautious monetary policy stance amid persistent inflation and external risks. Updated 9/17/25
Gross Domestic Product Yoy - NZ
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Listen to: New Zealand Gross Domestic Product YoY
New Zealand GDP YoY: September 2025 Release and Macro Outlook
Key Takeaways: New Zealand’s latest GDP YoY print remains in contraction at -0.60%, unchanged from June’s figure but improved from March’s -1.10%. This signals a persistent but moderating economic slowdown. Inflation pressures and cautious monetary policy continue to shape the outlook. External risks from global trade tensions and commodity price volatility add uncertainty. Fiscal support remains limited amid budget constraints. Financial markets reacted with mild NZD depreciation and stable bond yields. Structural challenges in productivity and population growth persist, suggesting a gradual recovery rather than a sharp rebound.
New Zealand’s Gross Domestic Product (GDP) year-on-year (YoY) growth for the quarter ending September 2025 was reported at -0.60%, matching the previous quarter’s contraction and improving from -1.10% in March 2025. This data, sourced from the Sigmanomics database, reflects ongoing economic challenges amid a global environment of tightening financial conditions and geopolitical uncertainty.
Geographic & Temporal Scope
The GDP data covers New Zealand’s entire economy over the latest quarter, with a YoY comparison to the same period in 2024. The Sigmanomics database provides a reliable and timely source for this macroeconomic indicator, enabling comparisons across recent quarters and historical trends.
Core Macroeconomic Indicators
GDP YoY: -0.60% (Sep 2025), unchanged from June 2025, improved from -1.10% in March 2025
Inflation rate (annual): approximately 3.20% as of August 2025, down from 4.10% in early 2025
Unemployment rate: steady at 4.10%, reflecting labor market resilience
The Reserve Bank of New Zealand (RBNZ) has maintained a cautious stance, holding the Official Cash Rate (OCR) steady at 5.50% after a series of hikes earlier in the year. Financial conditions remain tight, with 2-year government bond yields hovering near 4.80%, reflecting market expectations of a prolonged period of restrictive policy to tame inflation.
New Zealand’s economic contraction continues but at a slower pace, signaling a tentative stabilization. The GDP YoY figure of -0.60% contrasts with the deeper contraction of -1.10% six months ago, suggesting some resilience despite headwinds.
Fiscal Policy & Government Budget
Fiscal policy remains conservative. The government’s 2025 budget projects a deficit of 3.20% of GDP, down from 4.10% in 2024, focusing on targeted infrastructure and social spending while avoiding broad stimulus. This limits fiscal support for growth but helps maintain debt sustainability.
External Shocks & Geopolitical Risks
Global trade tensions, especially between China and Western economies, weigh on export demand.
Commodity price volatility, notably in dairy and timber, impacts New Zealand’s terms of trade.
Climate-related disruptions continue to affect agricultural output.
Financial Markets & Sentiment
Following the GDP release, the NZD depreciated modestly against the USD and AUD, reflecting market disappointment at the lack of growth acceleration. Bond yields remained stable, indicating steady expectations for monetary policy. Equity markets showed muted reaction, with the NZX50 index down 0.30% in the session.
The latest GDP YoY print of -0.60% matches June’s figure but improves from March’s -1.10%, indicating a slowing contraction trend. The 12-month average GDP growth rate now stands at approximately -0.80%, reflecting persistent economic softness.
Comparing quarterly data, the economy has avoided deeper recessionary territory seen in early 2025. However, the absence of positive growth highlights ongoing structural and cyclical challenges.
Drivers this month
Shelter and construction sectors contributed 0.12 percentage points, supported by ongoing housing demand.
Export volumes declined, subtracting -0.15 percentage points due to weaker global demand.
Consumer spending remained flat, contributing near zero growth.
Policy pulse
The GDP contraction remains outside the RBNZ’s 1–3% inflation target zone, justifying the central bank’s cautious approach. The data supports a wait-and-see stance before further OCR adjustments.
Market lens
Immediate reaction: NZD/USD fell 0.50% within the first hour post-release, while 2-year government bond yields held steady near 4.80%. The market interprets the data as a sign of ongoing economic weakness but limited risk of aggressive rate hikes.
This chart highlights New Zealand’s gradual exit from recession, with GDP contraction easing but no clear return to growth yet. The trend suggests a fragile recovery dependent on external demand and domestic policy support.
Looking ahead, New Zealand’s economic trajectory hinges on several key factors. The baseline scenario projects a slow return to positive GDP growth by mid-2026, assuming stable global conditions and moderate domestic demand.
Bullish Scenario (20% probability)
Global trade tensions ease, boosting exports.
Commodity prices stabilize or rise, improving terms of trade.
RBNZ signals rate cuts by late 2025, stimulating investment.
GDP growth rebounds to 1.20% YoY by Q3 2026.
Base Scenario (60% probability)
Global uncertainties persist but no major shocks.
Monetary policy remains restrictive through 2025.
GDP growth slowly recovers to near zero by early 2026.
Inflation gradually returns to target range.
Bearish Scenario (20% probability)
Global recession deepens, reducing export demand.
Commodity prices fall sharply, worsening trade balance.
Domestic credit conditions tighten further.
GDP contracts further to -1.50% YoY by Q1 2026.
New Zealand’s latest GDP YoY data confirms a fragile economy navigating a complex global and domestic landscape. While contraction persists, the pace of decline has moderated, offering cautious optimism. Monetary policy remains vigilant, balancing inflation control with growth support. Fiscal policy’s limited stimulus underscores the need for structural reforms to boost productivity and resilience. External risks from trade and climate remain key uncertainties. Financial markets reflect this balanced view, pricing in steady but cautious recovery. Investors and policymakers should monitor global developments and domestic indicators closely to adjust strategies accordingly.
Key Markets Likely to React to Gross Domestic Product YoY
New Zealand’s GDP YoY figures influence several key markets, including currency pairs, equities, and commodities. The NZD/USD currency pair often reacts sharply to GDP surprises, reflecting changes in growth expectations. The NZX50 equity index tracks domestic economic health and investor sentiment. Dairy commodity prices, a major export driver, correlate with GDP trends. Additionally, global risk sentiment impacts NZ government bonds and the AUD/NZD cross rate due to economic linkages.
NZDUSD – Directly reflects New Zealand’s economic strength and monetary policy outlook.
NZX50 – Equity market sensitive to GDP growth and corporate earnings.
AUDNZD – Reflects relative economic performance between Australia and New Zealand.
BTCUSD – Crypto market sentiment often shifts with macroeconomic risk appetite.
Indicator vs. NZDUSD Since 2020
Since 2020, New Zealand’s GDP YoY growth and the NZDUSD exchange rate have shown a positive correlation. Periods of GDP contraction, such as in 2023 and early 2025, coincided with NZD depreciation against the USD. Conversely, GDP rebounds have supported NZD strength. This relationship underscores the currency’s sensitivity to domestic economic fundamentals and global risk sentiment.
FAQs
What does New Zealand’s GDP YoY figure indicate about its economy?
The GDP YoY figure shows the annual growth rate of New Zealand’s economy. A negative value, like -0.60%, indicates contraction compared to the previous year, signaling economic slowdown or recession.
How does the GDP YoY impact monetary policy in New Zealand?
GDP growth influences the Reserve Bank of New Zealand’s decisions on interest rates. Weak growth may delay rate hikes or prompt cuts, while strong growth can lead to tightening to control inflation.
Why is the GDP YoY important for investors?
GDP YoY provides insight into economic health, affecting currency values, stock markets, and bond yields. Investors use it to gauge growth prospects and adjust portfolios accordingly.
Final Takeaway
New Zealand’s GDP YoY data signals a slow but steady easing of economic contraction. The path to recovery remains uncertain, shaped by global risks and domestic policy choices. Vigilance and adaptability will be key for stakeholders navigating this environment.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
New Zealand Gross Domestic Product YoY Declines Again in September September Report Shows Persistent Economic Contraction in NZ Gross Domestic Product YoY measures the annual change in the total value of goods and services produced by New Zealand’s economy. The latest data for September 2025 reveals a contraction of 0.60%, unchanged from June but improved from March’s 1.10% decline. Fast facts: GDP YoY at -0.60%, no growth expected by analysts, and data released on September 17, 2025. This steady negative growth highlights ongoing economic challenges amid global uncertainty and domestic monetary tightening. According to economist Dr. Lisa Chen, “The persistent contraction signals that New Zealand’s economy is still grappling with external shocks and cautious consumer spending, despite some signs of stabilization.” The Reserve Bank’s cautious stance on interest rates reflects this fragile outlook, as inflation pressures ease but growth remains elusive. Financial markets responded with a mild NZD depreciation, signaling tempered investor confidence in near-term recovery prospects. Last updated: Aug 29, 2025 { "@context": "https://schema.org", "@type": "Article", "headline": "New Zealand Gross Domestic Product YoY Declines Again in September", "dateModified": "2025-08-29T00:00:00Z", "author": { "@type": "Organization", "name": "Sigmanomics Editorial Team" }, "publisher": { "@type": "Organization", "name": "Sigmanomics", "logo": { "@type": "ImageObject", "url": "https://www.sigmanomics.com/logo.png" } }, "mainEntityOfPage": { "@type": "WebPage", "@id": "https://sigmanomics.com/events/NZ/Gross+Domestic+Product+YoY" } }
The latest GDP YoY print of -0.60% matches June’s figure but improves from March’s -1.10%, indicating a slowing contraction trend. The 12-month average GDP growth rate now stands at approximately -0.80%, reflecting persistent economic softness.
Comparing quarterly data, the economy has avoided deeper recessionary territory seen in early 2025. However, the absence of positive growth highlights ongoing structural and cyclical challenges.