Westpac, ASB, and Kiwibank comment on latest GDP figures
New Zealand’s economy demonstrated resilience with a 0.7% increase in GDP during the December quarter, showing a rebound from previous declines.
Notable growth in sectors like rental, hiring, and real estate, alongside retail and healthcare, underscored the recovery.
Despite this growth, challenges persisted in construction and telecommunications, which faced significant declines.
Tourism up, construction and telecom down
Katrina Dewbery from Stats NZ highlighted the positive impact of increased spending by international visitors on the tourism sector.
However, the construction industry continued its downturn, and information media and telecommunications sectors struggled due to reduced service demands.
ASB’s cautious economic outlook
Mark Smith (pictured top left) from ASB provided a nuanced view, suggesting that while the growth is a positive sign, it doesn’t fully secure an economic recovery trajectory.
“The economic recovery is still fragile, with the global context providing ongoing risks,” Smith said.
He stressed that the economic growth was supported significantly by government spending and net exports rather than direct consumer spending.
Kiwibank: Guarded optimism amid signs of economic recovery
Kiwibank economists, Sabrina Delgado (pictured top right) and Mary Jo Vergara (pictured bottom left), remarked on the economic recovery’s foundation, noting that the uplift in the December quarter was a welcome change from the downturns in mid-2024.
“It’s a step forward, but we’re watching closely how sustainable this recovery will be amid varying economic pressures,” the economists said.
The December quarter’s results were buoyed by an uptick in service-related activities, particularly those benefiting from the summer tourist influx.
However, ongoing weaknesses in construction posed concerns about the sector's capacity to rebound quickly.
Westpac weighs in on economic rebound
Michael Gordon (pictured bottom right) of Westpac provided additional insights.
“After two quarters of steep decline, the December quarter GDP figures provided some hope that the worst has passed,” Gordon said. “The major contributors to the December quarter result were broadly as we expected.”
However, the Westpac economist cautioned about the risks in the construction sector and potential energy shortages.
Economists anticipate growth amid challenges
Looking ahead, both ASB and Kiwibank anticipate that lower interest rates and continued international tourist activity will bolster economic activity.
Yet, they cautioned that global economic uncertainties and domestic vulnerabilities could temper the pace of economic recovery.
The Reserve Bank’s future monetary policy decisions will be crucial in shaping the economic landscape in 2025, with potential rate cuts on the horizon to support growth.
