Finance Minister Nicola Willis presumably had hoped to brace Parliamentarians – and the public – for politically discomforting economic news from StatsNZ today.
She was aided and abetted by National backbencher Hamish Campbell, who yesterday tossed her a patsy question which enabled her to say she had seen several recent reports about the New Zealand economy. Some were forecasts, peering into the future; some were data releases about the here and now;
“… and some are backward looking, given the long lag that can occur between events happening and their being reported”.
Each type added to our understanding of how the economy has been performing and is expected to perform in the future, Willis said.
Campbell followed up by asking: When will the next GDP figures be released?
That was the cue for Willis to bring the GDP stats for the second quarter of this year – released today – into considerations.
She described these as “a good example of backward-looking data”, then elaborated:
“The second quarter started on 1 April, before the ‘Liberation Day’ tariff announcement, and we are now only a couple of weeks away from the fourth quarter.
“Peering in the rear-view mirror, forecasters are picking a negative number for growth in Q2—somewhere between negative 0.3 percent to negative 0.5 percent, with activity in the manufacturing and construction industries likely to have fallen”.
No, worse than that. StatsNZ this morning reported a negative 0.9 per cent.
This wiped out the 0.9 per cent increase recorded in the first three months of the year.
Activity decreased in the June 2025 quarter across two out of three high-level industry groups: goods-producing industries fell 2.3 percent, and primary industries fell 0.7 percent. Service industries were flat.
“The 0.9 percent 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.”
But Willis in Parliament yesterday had a scapegoat for a negative figure – the USA’s President Donald Trump:
“As I said, the second quarter … was when substantial tariffs were announced, representing the biggest hit to trade openness since the 1930s. That clearly affected the confidence of firms to invest and employ staff, and the willingness of households to spend.”
Campbell’s next patsy was designed to enable Willis to tell us how the economy is performing in the current quarter.
She was bullish:
“We are currently getting towards the end of the third quarter. Recent monthly data points to growth returning in this quarter, indicating that the worst is behind us.
“For example, the performance of manufacturing and services indices are a bit better than they were in the second quarter. The ANZ’s Truckometer also points to an improvement. Electronic card transaction values show a rise in July and August, and lower interest rates are having more of an impact on households as mortgage holders move to fixed, on lower and longer-term rates.
“Despite a stutter in the second quarter, the economy looks likely to have picked up again.”
Campbell next wanted to know what the forecasters are saying about growth in future quarters.
In response, Willis was even more bullish:
Forecasters are expecting economic growth to strengthen as lower interest rates are felt more widely across the economy and uncertainty around tariffs passes. For example, the Reserve Bank’s Monetary Policy Statement last month forecasts modest growth of 0.3 percent in the third quarter, but accelerating to 0.8 percent in the fourth quarter—which is, as I said, only a fortnight away—and remaining at around that level for the next couple of years.
More broadly, the New Zealand Institute of Economic Research does a regular exercise to average the individual forecasts of banks and other forecasters. The latest one was released on Monday; it shows the average GDP forecast of 0.5 percent for the current quarter—that is the third quarter—and 0.9 percent for the next quarter.
But whoa.
Let’s note that the NZIER’s average “forecast” was June-quarter GDP of –0.1 per cent.
That was worked out by forecasters who had been armed with hard data about what had happened during those three months.
Even so, it was well adrift of the -0.9 per cent officially reported today.
The NZIER acknowledged the 0.9 per cent decline in GDP in the June quarter was weaker than its forecast and the market had expected.
The decline was broad-based across a range of industries, with the largest declines in manufacturing and construction, the institute said.
“Recovery in the New Zealand economy remains fragile.”
Overall, today’s GDP results did not change the NZIER’s view of the New Zealand economy.
The road of recovery since the contraction in mid-2024 has been disappointing so far. The effects of lower interest rates have been slow to translate into real activity, with continued caution from households and businesses. We expect the New Zealand economy to recover at a gradual pace over the coming year.
Commenting on the statistics, Willis stuck to her story of an economy slowed by overseas forces – or tariffs.
“International turmoil and uncertainty relating to tariffs clearly had an impact on firms’ and households’ willingness to make investment decisions,” Nicola Willis says.
“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, but suddenly had the stuffing knocked out of it. I feel for people and businesses who have been affected.”
Willis reminded us, too, that the figures recorded what had happened in a quarter that expired several weeks ago:
“It is important to remember that this is backwards-looking data. We are now nearing the end of the third quarter and there are signs the economy is growing again.
“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.”
And – she insisted – all forecasters are expecting economic growth to strengthen from now on as uncertainty about the impact of increased tariffs eases…
Great. From hereon we can expect growth, growth, growth.
Bob Edlin is a veteran journalist and editor for the Point of Order blog HERE. - where this article was sourced.
“… and some are backward looking, given the long lag that can occur between events happening and their being reported”.
Each type added to our understanding of how the economy has been performing and is expected to perform in the future, Willis said.
Campbell followed up by asking: When will the next GDP figures be released?
That was the cue for Willis to bring the GDP stats for the second quarter of this year – released today – into considerations.
She described these as “a good example of backward-looking data”, then elaborated:
“The second quarter started on 1 April, before the ‘Liberation Day’ tariff announcement, and we are now only a couple of weeks away from the fourth quarter.
“Peering in the rear-view mirror, forecasters are picking a negative number for growth in Q2—somewhere between negative 0.3 percent to negative 0.5 percent, with activity in the manufacturing and construction industries likely to have fallen”.
No, worse than that. StatsNZ this morning reported a negative 0.9 per cent.
This wiped out the 0.9 per cent increase recorded in the first three months of the year.
Activity decreased in the June 2025 quarter across two out of three high-level industry groups: goods-producing industries fell 2.3 percent, and primary industries fell 0.7 percent. Service industries were flat.
“The 0.9 percent 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.”
But Willis in Parliament yesterday had a scapegoat for a negative figure – the USA’s President Donald Trump:
“As I said, the second quarter … was when substantial tariffs were announced, representing the biggest hit to trade openness since the 1930s. That clearly affected the confidence of firms to invest and employ staff, and the willingness of households to spend.”
Campbell’s next patsy was designed to enable Willis to tell us how the economy is performing in the current quarter.
She was bullish:
“We are currently getting towards the end of the third quarter. Recent monthly data points to growth returning in this quarter, indicating that the worst is behind us.
“For example, the performance of manufacturing and services indices are a bit better than they were in the second quarter. The ANZ’s Truckometer also points to an improvement. Electronic card transaction values show a rise in July and August, and lower interest rates are having more of an impact on households as mortgage holders move to fixed, on lower and longer-term rates.
“Despite a stutter in the second quarter, the economy looks likely to have picked up again.”
Campbell next wanted to know what the forecasters are saying about growth in future quarters.
In response, Willis was even more bullish:
Forecasters are expecting economic growth to strengthen as lower interest rates are felt more widely across the economy and uncertainty around tariffs passes. For example, the Reserve Bank’s Monetary Policy Statement last month forecasts modest growth of 0.3 percent in the third quarter, but accelerating to 0.8 percent in the fourth quarter—which is, as I said, only a fortnight away—and remaining at around that level for the next couple of years.
More broadly, the New Zealand Institute of Economic Research does a regular exercise to average the individual forecasts of banks and other forecasters. The latest one was released on Monday; it shows the average GDP forecast of 0.5 percent for the current quarter—that is the third quarter—and 0.9 percent for the next quarter.
But whoa.
Let’s note that the NZIER’s average “forecast” was June-quarter GDP of –0.1 per cent.
That was worked out by forecasters who had been armed with hard data about what had happened during those three months.
Even so, it was well adrift of the -0.9 per cent officially reported today.
The NZIER acknowledged the 0.9 per cent decline in GDP in the June quarter was weaker than its forecast and the market had expected.
The decline was broad-based across a range of industries, with the largest declines in manufacturing and construction, the institute said.
“Recovery in the New Zealand economy remains fragile.”
Overall, today’s GDP results did not change the NZIER’s view of the New Zealand economy.
The road of recovery since the contraction in mid-2024 has been disappointing so far. The effects of lower interest rates have been slow to translate into real activity, with continued caution from households and businesses. We expect the New Zealand economy to recover at a gradual pace over the coming year.
Commenting on the statistics, Willis stuck to her story of an economy slowed by overseas forces – or tariffs.
“International turmoil and uncertainty relating to tariffs clearly had an impact on firms’ and households’ willingness to make investment decisions,” Nicola Willis says.
“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, but suddenly had the stuffing knocked out of it. I feel for people and businesses who have been affected.”
Willis reminded us, too, that the figures recorded what had happened in a quarter that expired several weeks ago:
“It is important to remember that this is backwards-looking data. We are now nearing the end of the third quarter and there are signs the economy is growing again.
“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.”
And – she insisted – all forecasters are expecting economic growth to strengthen from now on as uncertainty about the impact of increased tariffs eases…
Great. From hereon we can expect growth, growth, growth.
Bob Edlin is a veteran journalist and editor for the Point of Order blog HERE. - where this article was sourced.
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