Stats NZ data shows gross domestic product – the broad measure of economic growth – rose 0.7% in the three months ended December, to be 1.1% lower than a year ago.
Expectations had been for quarterly growth of 0.3%, and and annual contraction of 1.3%, after the previous two quarters of contraction.
“Higher spending by international visitors led to increased activity in tourism related industries such as accommodation, restaurants and bars, transport and vehicle hiring,” spokesperson Katrina Dewbery said.
Recession over
The main growth spots were agriculture, up 1.4%, retail up 1.9%, and transport up 2.4%.
Those were partly offset by a 3% fall in construction, reflecting the slow down in house building, and decreases in telecommunications and internet services.
The energy sector, which had dented the previous quarter because of the mid-winter power crunch, rebounded as conditions returned to more normal activity.
Individual shares of the economy – per capita GDP – rose 0.4%, the first quarterly increase in two years, but were still more than 2% over the year.
The country’s purchasing power (disposable income) improved 1.2 % for the quarter, after shrinking in the previous six months, although it was was still 2 % down on a year ago.
Slow recovery
The latest GDP reading marked the turning point for the economy, which fell into its worst contraction in nearly 30 years, outside of the Covid-19 era.
Lower interest rates are expected to give a spark to household spending and business investment.
Forecasts are for modest, positive growth this year picking up pace in the second half for an annual rate between 1.5-2.0%, rising towards 3% next year.
However, a soft labour market, with unemployment expected to nudge higher, is expected to keep a brake on household spending.
The uncertain global outlook and impact of any tariffs on world growth is expected to weigh on business activity and investing decisions.
New Zealand’s quarterly growth rate was one of the stronger among our major trading partners, but the annual contraction was the weakest of any for 2024.
