December 17, 2025 • 11 mins
New Zealand's economy grew more than expected between July and September.
But between April and June, it shrank more than previously thought.
GDP rose 1.1% in the September quarter, surpassing all expectation but Stats NZ has revised the numbers for the June quarter, finding GDP actually fell 1%, not the previously-reported 0.9%.
That means the economy shrank 0.5% in the year to September.
NZ Herald Business Editor Liam Dann told Kerre Woodham the data is showing there’s some momentum in the economy, especially within manufacturing and business services.
He says consumers take a bit longer to feel upbeat, but the business core of the economy is picking up.
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Speaker 1 (00:06):
You're listening to the Kerry Wood and Morning's podcast from
News Talks.
Speaker 2 (00:10):
He'd be as you will have heard no news. New
Zealand's economy is officially in rebound. Data just out from
Statscene's edgehows GDP rose one point one percent in the
three months to September. The Reserve Bank had been forecasting
a growth rate of about zero point four percent. Economists
had been expecting it to sit around zero point nine.
(00:31):
But here we are one point one. New Zealand Herald
Business editor at largely M Dan Good morning to.
Speaker 3 (00:36):
You, morning carry.
Speaker 2 (00:38):
Nice to have you back again.
Speaker 3 (00:39):
Yeah, yeah, well with some good news, I think, yeah, yeah,
I mean, let's just take that as good news. I mean,
there's all sorts of caveats I'm going to sort of
add to it.
Speaker 2 (00:46):
Go on, you come on.
Speaker 3 (00:48):
It was stronger than we expected, and that means I
guess that, you know, we can say there is a
recovery underway. They revised the second quarter as expected, but
they revised it downwards. Wow, so the second quarter was
slightly you know, these I wouldn't hung up on decimal
points too much, but it was. It was Previously they
(01:11):
thought it was zero point nine down for the second quarter.
It turned out to be one percent down, Given that
people thought that was going to be revised up. That
just tells us that I think that the second quarter
was as horrible as it felt. Too many businesses and
but it you know, it's it's what the data is
showing there today is some momentum, especially in manufacturing and
(01:33):
business services, you know, So it's that business y core
of the economy that's picking up. The consumer end was
was just up, like there was a little bit of
life and household spending and consumer spending, I think it was.
I saw a zero point one percent growth, But that's
better than going backwards. We knew that the consumers take
(01:55):
a bit longer to feel upbeat, and we see it
in the confidence surveys. But yeah, all up that that's
a pretty good number. It needs to be sustained, obviously,
and we don't want to keep bouncing round. But I
would imagine I think we've already had the press release
from the Prime Minister and the Finance Minister will be
following saying, look, it's all happening, so hopefully it is.
Speaker 2 (02:17):
How do the Reserve Bank get it's a roll that's
a bit alarming, isn't it.
Speaker 3 (02:23):
Surprised did not upgrade it their last in ps in
November because that was late November, like like Treasury can,
you know, quite often has it terribly wrong because they
only sort of do it every six months their forecasts
and that they But yeah, I thought they stayed. I
guess better to be conservative if you're the Reserve Bank.
(02:44):
But there were some signs of green shoots, which the
Reserve Bank talked about and it's in its monetary policy statements.
So I'm not sure why they stayed so gloomy on
on what they thought the GDP growth would be. The
bank economists went far off, so you know, picks between
zero point eight and zero point and one percent. I
think A and Z picked one percent, so more or
(03:04):
less they got they got the ten right. It's a
bit like the weather forecasts. You can tell you if
it's going to rain or not, but not exactly when
the rain's going to arrive, and you know, that's the
best we can expect from forecasts.
Speaker 2 (03:15):
I can't remember if I said we would talk about
it today or if.
Speaker 3 (03:20):
There was something we were going to come back to.
Speaker 2 (03:22):
I think it was the fact that you had a
a contributor to your columns say, is GDP a good measure?
Speaker 3 (03:31):
Yes, Oh that's right.
Speaker 2 (03:32):
That's what we were going to talk about, wasn't it.
Speaker 3 (03:34):
Yeah. Yeah, And so some people are very quick to say,
and quite rightly, look what's happening with GDP per capita
because it gets flattered by population growth. We don't have
that much population growth at the moment, so that's solving
that problem. So GDP per capital was zero point nine
percent this time, So this is that's the best GDP
per capita result we've had for probably years. But it's
(03:58):
partly a symptom of the fact that our population is growing.
So the two numbers are a little bit more in sync.
And we had a decent size fall and per capita growth,
but per capita growth is probably a better approximation of
what individuals might be feeling. But you know, GDP still
falls down in the sense that it's a big aggregate number.
It doesn't measure the inequality of growth and all that
(04:22):
sort of stuff. So you know, you could have, you know,
the kind of economy where one sector was just booming, Well,
we kind of have with our agriculture exactly, and those
backing lots of money and spending money, and there could
be a whole bunch of people not doing well and
the number on aggregate would look quite good even on
a per capita basis potentially, so perhaps there is a
(04:44):
bit of that. Certainly that is the case that the
you know, we know that Auckland and Wellington are lagging
and that people are feeling a bit gloomier there. But
you get to Canterbury Otago, Southland, you can see it
in house prices and confidence that things are moving more
and that's agriculturally related to agricultural exports and farmers and
(05:04):
all that stuff. And maybe maybe two the coming back
as well, So that is all quite positive. You'd expect
it to spread through the cities, hopefully with interest rates
being a bit lower and.
Speaker 2 (05:16):
They're going back up again.
Speaker 3 (05:17):
Well yeah, there's been these movements because of the wholesale
markets and the retail banks haven't mucked around and making
sure they maintain their margins and their profits, which has
you know, copped a bit of flack. But I don't
think the ocr will be quick to you know, they'll
be quick to move the ocr so you you should see,
(05:37):
you know, so the readjustment of the longer term rates especially,
so there's been some the banks will say, oh, well,
we cut the six month rate year because they want
you to take the cheap rate because I know it's
going to be worse later. But the longer term rates, well,
you know, if the economy continues to improve, the next
move of the ocr will probably be up to sort
of get it back into neutral because we're in a
(05:59):
sort of stimulatory phase at the moment. And there's a
bit of debate on markets whether that's sort of middle
next year or late next year or you know, and
that'll depend on how the economy progresses. But because the
market generally sees it happening later next year, anyone who's
going to fix for longer than a year is going
(06:20):
to see those longer term rates just just edge up slightly.
So it's more about the window to lock in for
the absolute lowest rate having sort of passed. It was
a very tiny window. Yet you're still going to see
a lot of people coming off higher rates, you know,
if if her are on the two year fixed and
if they'll be coming up in the next six months
(06:41):
or so, and that that still flows through the economists
still think we're going to see a fair bit of
flow through for kiwis coming off sort of the one year,
eighteen month two year fixed rates. If they were clever
enough to do a five year fixed rate way back
in the COVID gloom, then they may actually be going
up at the moment, but they'll have hopefully banked all
those returns from being at a super low rate for
(07:03):
the last five years.
Speaker 2 (07:05):
And as much the same good news about the GDP growth.
But once again the Reserve Bank is miles out on
its projection. So let's hope the new Swedish governor in
future will be much more astute in determining the bank's forecast,
because if they do miss the mark by so much,
how can we have faith in future projections?
Speaker 3 (07:22):
Don't have much faith in forecasts at all.
Speaker 2 (07:25):
Again, anybody's forecasts.
Speaker 3 (07:27):
Well, I mean, I still look at my Apple weather
app and it says, oh, it's no rain today, and
I look at the window and it's actually raining, and
I still look at the app. It's hopeless. So so
just but similarly with economic forecasts, and I've looked at
the academic research on this, they're not bad. In the
(07:48):
sort of a few months up to about one quarter
out they can pick the direction. The more specific they
have to be, the worse they are. So I mean,
I guess the Reserve Bank pick GDP would grow so
it got the direction of travel right, and you get
out much further than half a year, and they're absolutely useless.
I mean, so when you see Treasury picking what's going
(08:11):
to happen to house prices in twenty twenty eight, it's
just box ticking. It's just filling in a box because
they have to do that because the government needs something
to work off with its budget projections. But there is
no way an economist can pick what's going happened.
Speaker 2 (08:25):
Why are we picking surpluses and times of when we're
going to get.
Speaker 3 (08:30):
All that will change around?
Speaker 1 (08:31):
You know.
Speaker 3 (08:31):
What you'll see is that there'll be a long period
of oh, we're doing better than treasury forecasts. We're doing
worse than Treasury forecasts. I mean, I guess and see
where it's needing something to hang on to as a baseline,
you know, something our best guess. But yeah, I think
long term forecasts are really not worth betting on. If
(08:54):
you're thinking about your own personal circuit, something will happen,
you know, at some point in the next four years,
there will be a Wall Street crash.
Speaker 2 (09:01):
Or there will be an AI crash, yeah, or.
Speaker 3 (09:04):
Something good could happen. AI deliver the amazing productivity gains
that we all want, and we might all discover that,
you know, that the economy is more productive than we
thought it was going to be. Things that are unexpected
happen all the time. That's life, and you know, you
can only you know. I think that the further you
get it out with forecasts, the less seriously you should
(09:25):
take them. They can be useful for a bit of context,
and I don't know, but yeah, I think pointless once
you get out beyond a year or so's.
Speaker 2 (09:35):
Yeah, what's kind of doing yourself out of a job,
isn't it?
Speaker 3 (09:38):
Well, I don't. To me, economics isn't you know. People
love predictions and forecasts and maybe they're fun, maybe they're
part of the game, but it's to me, it's more
about having the context to understand what's happening in the
world around you, and economics is such a big part
of the world around us. We need a framework to
know which direction we're traveling and that sort of thing. So,
(10:00):
so it is you do want to look out to
twenty twenty six and think, well, I you know, if
you've got a business, look, it looks like it's growing.
You know, the economy is growing. It looks like the
growth will continue for a while. There are some basic things,
so now it's time to think about the opportunity, the
chance to invest, whereas you know, a couple of years
ago it was time to think about battening down the
(10:22):
hatches and contracting and that sort of stuff is useful,
but you just have to keep it in context of
your own experience. So I do think, you know, economics
has some real value, but I just always advise people
not to treat it as gospel or something.
Speaker 2 (10:37):
Science an exact science, not.
Speaker 3 (10:38):
An exact science, and certainly sometimes it gets treated as
a religion, and I think that's like these are soothsayers
who sort of predict the future in a crystal ball
for us, and that that's not the case as everyone
has seen over the past few years.
Speaker 2 (10:52):
Well, thank you so much. I mean, whether it's an
exact science or not, I always enjoy hearing what you
have to say, and you're very relatable and make it
really really interesting, even to somebody who got six percentence.
Speaker 3 (11:05):
Of maths yeah, well that's right. Don't ask me about
six four maths. But thanks Carrie, you know, always great
to chat and Merry Christmas to everybody, Merry.
Speaker 2 (11:14):
Christmas to you.
Speaker 1 (11:16):
For more from Carry Wooden Mornings, listen live to news
talks it'd be from nine am weekdays, or follow the
podcast on iHeartRadio
You're listening to the Kerry Wood and Morning's podcast from
News Talks.
Speaker 2 (00:10):
He'd be as you will have heard no news. New
Zealand's economy is officially in rebound. Data just out from
Statscene's edgehows GDP rose one point one percent in the
three months to September. The Reserve Bank had been forecasting
a growth rate of about zero point four percent. Economists
had been expecting it to sit around zero point nine.
(00:31):
But here we are one point one. New Zealand Herald
Business editor at largely M Dan Good morning to.
Speaker 3 (00:36):
You, morning carry.
Speaker 2 (00:38):
Nice to have you back again.
Speaker 3 (00:39):
Yeah, yeah, well with some good news, I think, yeah, yeah,
I mean, let's just take that as good news. I mean,
there's all sorts of caveats I'm going to sort of
add to it.
Speaker 2 (00:46):
Go on, you come on.
Speaker 3 (00:48):
It was stronger than we expected, and that means I
guess that, you know, we can say there is a
recovery underway. They revised the second quarter as expected, but
they revised it downwards. Wow, so the second quarter was
slightly you know, these I wouldn't hung up on decimal
points too much, but it was. It was Previously they
(01:11):
thought it was zero point nine down for the second quarter.
It turned out to be one percent down, Given that
people thought that was going to be revised up. That
just tells us that I think that the second quarter
was as horrible as it felt. Too many businesses and
but it you know, it's it's what the data is
showing there today is some momentum, especially in manufacturing and
(01:33):
business services, you know, So it's that business y core
of the economy that's picking up. The consumer end was
was just up, like there was a little bit of
life and household spending and consumer spending, I think it was.
I saw a zero point one percent growth, But that's
better than going backwards. We knew that the consumers take
(01:55):
a bit longer to feel upbeat, and we see it
in the confidence surveys. But yeah, all up that that's
a pretty good number. It needs to be sustained, obviously,
and we don't want to keep bouncing round. But I
would imagine I think we've already had the press release
from the Prime Minister and the Finance Minister will be
following saying, look, it's all happening, so hopefully it is.
Speaker 2 (02:17):
How do the Reserve Bank get it's a roll that's
a bit alarming, isn't it.
Speaker 3 (02:23):
Surprised did not upgrade it their last in ps in
November because that was late November, like like Treasury can,
you know, quite often has it terribly wrong because they
only sort of do it every six months their forecasts
and that they But yeah, I thought they stayed. I
guess better to be conservative if you're the Reserve Bank.
(02:44):
But there were some signs of green shoots, which the
Reserve Bank talked about and it's in its monetary policy statements.
So I'm not sure why they stayed so gloomy on
on what they thought the GDP growth would be. The
bank economists went far off, so you know, picks between
zero point eight and zero point and one percent. I
think A and Z picked one percent, so more or
(03:04):
less they got they got the ten right. It's a
bit like the weather forecasts. You can tell you if
it's going to rain or not, but not exactly when
the rain's going to arrive, and you know, that's the
best we can expect from forecasts.
Speaker 2 (03:15):
I can't remember if I said we would talk about
it today or if.
Speaker 3 (03:20):
There was something we were going to come back to.
Speaker 2 (03:22):
I think it was the fact that you had a
a contributor to your columns say, is GDP a good measure?
Speaker 3 (03:31):
Yes, Oh that's right.
Speaker 2 (03:32):
That's what we were going to talk about, wasn't it.
Speaker 3 (03:34):
Yeah. Yeah, And so some people are very quick to say,
and quite rightly, look what's happening with GDP per capita
because it gets flattered by population growth. We don't have
that much population growth at the moment, so that's solving
that problem. So GDP per capital was zero point nine
percent this time, So this is that's the best GDP
per capita result we've had for probably years. But it's
(03:58):
partly a symptom of the fact that our population is growing.
So the two numbers are a little bit more in sync.
And we had a decent size fall and per capita growth,
but per capita growth is probably a better approximation of
what individuals might be feeling. But you know, GDP still
falls down in the sense that it's a big aggregate number.
It doesn't measure the inequality of growth and all that
(04:22):
sort of stuff. So you know, you could have, you know,
the kind of economy where one sector was just booming, Well,
we kind of have with our agriculture exactly, and those
backing lots of money and spending money, and there could
be a whole bunch of people not doing well and
the number on aggregate would look quite good even on
a per capita basis potentially, so perhaps there is a
(04:44):
bit of that. Certainly that is the case that the
you know, we know that Auckland and Wellington are lagging
and that people are feeling a bit gloomier there. But
you get to Canterbury Otago, Southland, you can see it
in house prices and confidence that things are moving more
and that's agriculturally related to agricultural exports and farmers and
(05:04):
all that stuff. And maybe maybe two the coming back
as well, So that is all quite positive. You'd expect
it to spread through the cities, hopefully with interest rates
being a bit lower and.
Speaker 2 (05:16):
They're going back up again.
Speaker 3 (05:17):
Well yeah, there's been these movements because of the wholesale
markets and the retail banks haven't mucked around and making
sure they maintain their margins and their profits, which has
you know, copped a bit of flack. But I don't
think the ocr will be quick to you know, they'll
be quick to move the ocr so you you should see,
(05:37):
you know, so the readjustment of the longer term rates especially,
so there's been some the banks will say, oh, well,
we cut the six month rate year because they want
you to take the cheap rate because I know it's
going to be worse later. But the longer term rates, well,
you know, if the economy continues to improve, the next
move of the ocr will probably be up to sort
of get it back into neutral because we're in a
(05:59):
sort of stimulatory phase at the moment. And there's a
bit of debate on markets whether that's sort of middle
next year or late next year or you know, and
that'll depend on how the economy progresses. But because the
market generally sees it happening later next year, anyone who's
going to fix for longer than a year is going
(06:20):
to see those longer term rates just just edge up slightly.
So it's more about the window to lock in for
the absolute lowest rate having sort of passed. It was
a very tiny window. Yet you're still going to see
a lot of people coming off higher rates, you know,
if if her are on the two year fixed and
if they'll be coming up in the next six months
(06:41):
or so, and that that still flows through the economists
still think we're going to see a fair bit of
flow through for kiwis coming off sort of the one year,
eighteen month two year fixed rates. If they were clever
enough to do a five year fixed rate way back
in the COVID gloom, then they may actually be going
up at the moment, but they'll have hopefully banked all
those returns from being at a super low rate for
(07:03):
the last five years.
Speaker 2 (07:05):
And as much the same good news about the GDP growth.
But once again the Reserve Bank is miles out on
its projection. So let's hope the new Swedish governor in
future will be much more astute in determining the bank's forecast,
because if they do miss the mark by so much,
how can we have faith in future projections?
Speaker 3 (07:22):
Don't have much faith in forecasts at all.
Speaker 2 (07:25):
Again, anybody's forecasts.
Speaker 3 (07:27):
Well, I mean, I still look at my Apple weather
app and it says, oh, it's no rain today, and
I look at the window and it's actually raining, and
I still look at the app. It's hopeless. So so
just but similarly with economic forecasts, and I've looked at
the academic research on this, they're not bad. In the
(07:48):
sort of a few months up to about one quarter
out they can pick the direction. The more specific they
have to be, the worse they are. So I mean,
I guess the Reserve Bank pick GDP would grow so
it got the direction of travel right, and you get
out much further than half a year, and they're absolutely useless.
I mean, so when you see Treasury picking what's going
(08:11):
to happen to house prices in twenty twenty eight, it's
just box ticking. It's just filling in a box because
they have to do that because the government needs something
to work off with its budget projections. But there is
no way an economist can pick what's going happened.
Speaker 2 (08:25):
Why are we picking surpluses and times of when we're
going to get.
Speaker 3 (08:30):
All that will change around?
Speaker 1 (08:31):
You know.
Speaker 3 (08:31):
What you'll see is that there'll be a long period
of oh, we're doing better than treasury forecasts. We're doing
worse than Treasury forecasts. I mean, I guess and see
where it's needing something to hang on to as a baseline,
you know, something our best guess. But yeah, I think
long term forecasts are really not worth betting on. If
(08:54):
you're thinking about your own personal circuit, something will happen,
you know, at some point in the next four years,
there will be a Wall Street crash.
Speaker 2 (09:01):
Or there will be an AI crash, yeah, or.
Speaker 3 (09:04):
Something good could happen. AI deliver the amazing productivity gains
that we all want, and we might all discover that,
you know, that the economy is more productive than we
thought it was going to be. Things that are unexpected
happen all the time. That's life, and you know, you
can only you know. I think that the further you
get it out with forecasts, the less seriously you should
(09:25):
take them. They can be useful for a bit of context,
and I don't know, but yeah, I think pointless once
you get out beyond a year or so's.
Speaker 2 (09:35):
Yeah, what's kind of doing yourself out of a job,
isn't it?
Speaker 3 (09:38):
Well, I don't. To me, economics isn't you know. People
love predictions and forecasts and maybe they're fun, maybe they're
part of the game, but it's to me, it's more
about having the context to understand what's happening in the
world around you, and economics is such a big part
of the world around us. We need a framework to
know which direction we're traveling and that sort of thing. So,
(10:00):
so it is you do want to look out to
twenty twenty six and think, well, I you know, if
you've got a business, look, it looks like it's growing.
You know, the economy is growing. It looks like the
growth will continue for a while. There are some basic things,
so now it's time to think about the opportunity, the
chance to invest, whereas you know, a couple of years
ago it was time to think about battening down the
(10:22):
hatches and contracting and that sort of stuff is useful,
but you just have to keep it in context of
your own experience. So I do think, you know, economics
has some real value, but I just always advise people
not to treat it as gospel or something.
Speaker 2 (10:37):
Science an exact science, not.
Speaker 3 (10:38):
An exact science, and certainly sometimes it gets treated as
a religion, and I think that's like these are soothsayers
who sort of predict the future in a crystal ball
for us, and that that's not the case as everyone
has seen over the past few years.
Speaker 2 (10:52):
Well, thank you so much. I mean, whether it's an
exact science or not, I always enjoy hearing what you
have to say, and you're very relatable and make it
really really interesting, even to somebody who got six percentence.
Speaker 3 (11:05):
Of maths yeah, well that's right. Don't ask me about
six four maths. But thanks Carrie, you know, always great
to chat and Merry Christmas to everybody, Merry.
Speaker 2 (11:14):
Christmas to you.
Speaker 1 (11:16):
For more from Carry Wooden Mornings, listen live to news
talks it'd be from nine am weekdays, or follow the
podcast on iHeartRadio
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