The New Zealand economy contracted in the second quarter of 2025, with gross domestic product falling by 0.9% in new figures released by Stats NZ this morning.
It followed a revised 0.9% increase in the previous March quarter.
According to Stats NZ, activity decreased across two out of three high-level industry groups during the June quarter.
Goods-producing industries fell 2.3%, primary industries fell 0.7%, and service industries were flat.
“The 0.9% fall in economic activity in the June 2025 quarter was broad-based with falls in 10 out of 16 industries,” economic growth spokesperson Jason Attewell said.
“GDP has now fallen in 3 of the last 5 quarters.”
GDP is a broad measure of growth.
Trump tariffs knocked stuffing out of economy - Willis
Finance Minister Nicola Willis said today's data was a reflection of the impact "global uncertainty" has had on the economy.
“International turmoil and uncertainty relating to tariffs clearly had an impact on firms’ and households’ willingness to make investment decisions,” Willis said.
She said the economy "had the stuffing knocked out of it" when US President Donald Trump's tariffs went into effect.
“The second quarter of the year started the day before United States tariffs were announced.
“The economy had been growing strongly in the previous six months... I feel for people and businesses who have been affected."
Willis said there were signs the economy was growing again as the end of the current quarter approached.
"Lower interest rates are filtering through the economy. There is evidence of increased mortgage lending. And the impact of tariffs has not been as disruptive as initially feared. The outlook for most export sectors remains positive."
Labour's finance and economy spokesperson Barbara Edmonds said the figures showed "the damage National’s economic mismanagement is doing across the country".
“Thousands of jobs are being lost, businesses are struggling to stay afloat, and record numbers of New Zealanders are leaving to find work overseas.
“The consequences for families and communities are huge - less money in people’s pockets, more pressure on household budgets, and fewer work opportunities close to home.
“New Zealand is now on the edge of a recession - and Christopher Luxon has no plan to turn things around. That is simply not good enough."
Manufacturing the largest contributor
The largest contributor to the decrease was the manufacturing sector, which was down 3.5% in the quarter.
The drop was led by transport equipment, machinery, and equipment manufacturing, down 6.2%.
The Employers and Manufacturers Association said the result was a "knock at the wrong time".
"Even though the data reflects the June quarter, and we’re now seeing signs of improvement, it still sends a negative signal to businesses that are already cautious about investing and hiring," Alan McDonald, head of advocacy and strategy
"Despite the knock, there are signs of movement. We just need to make sure we continue to build more momentum."
Food, beverage, and tobacco manufacturing were down 2.2%.
"This was reflected in decreased export volumes associated with this type of manufacturing, such as meat products," Stats NZ said.
Construction dropped 1.8% in the quarter, following a 1.2% increase in the March quarter.
“Construction activity fell across a range of measures in the June 2025 quarter, not just GDP. The value of building work put in place, a key input to GDP, fell 2.2%, and filled jobs in the construction industry fell 1.3%,” Attewell said.
Rental, hiring, and real estate services were the largest upward contributors to the GDP, rising 0.7% over the quarter.
GDP per capita fell 1.1% during the quarter.
The expenditure measure of GPD also fell 0.9% in the June quarter after a 1.2% rise in the previous one.
Exports were down 1.2% with dairy, meat, and other food and beverage exports.
Household consumption expenditure rose 0.4% this quarter. Expenditure on durables and non-durables was up, while services were flat.
"The increased spending on durables was driven by rises for audio-visual equipment, such as televisions, computers, and telecommunication equipment," Stats NZ said.
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