The fall followed a revised 1.2% rise in GDP in the March quarter.<\/p>\n
For the June year, Stats NZ said, the decline in GDP was 1.1%.<\/p>\n
Activity decreased in the June quarter across two out of three high-level industry groups: goods-producing industries fell 2.3%, and primary industries fell 0.7%.<\/p>\n
Service industries were flat.<\/p>\n
\u201cThe 0.9% fall in economic activity in the June 2025 quarter was broad-based with falls in 10 out of 16 industries,\u201d Stats NZ economic growth spokesman Jason Attewell said.<\/p>\n
GDP has now fallen in three of the past five quarters.<\/p>\n
Wholesale interest rates and the New Zealand dollar fell after the news.<\/p>\n
By late morning, key two-year swap rates were down 6.5 basis points at 2.75% and the New Zealand dollar was off by 20 pips at US59.45c.<\/p>\n
The bigger-than-expected fall may put pressure on the Reserve Bank to be more aggressive with its cuts to the OCR, which sits at 3.0%.<\/p>\n
The bank cut the rate by a quarter of a point on August 20.<\/p>\n
The bank\u2019s next opportunity is on October 8.<\/p>\n
ANZ strategist David Croy said the GDP number was a \u201csignificant undershoot\u201d relative to market expectations.<\/p>\n
\u201cIt certainly suggests that the Reserve Bank should have cut in July, and I wouldn\u2019t be surprised if the market now starts to toy with the idea of a bigger cut next month,\u201d Croy said.<\/p>\n
Capital Economics said a sharp decline in output over the quarter puts a \u201cbumper\u201d 50-basis-point cut in play for the Reserve Bank at its October meeting.<\/p>\n
Market expectations were for the OCR to bottom out with a terminal rate of 2.5% by February 2026.<\/p>\n
\u201cRisks to our forecast for a terminal rate of 2.5% are also tilted to the downside,\u201d Capital Economics said.<\/p>\n
\u201cThe 0.9% fall in real GDP in Q2 was substantially worse than anyone had expected.<\/p>\n
\u201cThat puts the magnitude of the decline on par with what we saw at the start of last year\u2019s recession and leaves GDP 1.1% below its year-earlier level.\u201d<\/p>\n
Westpac economists said the weaker-than-expected outcome would no doubt encourage the Reserve Bank in its intentions to cut the OCR further this year.<\/p>\n
\u201cHowever, we also need to consider the implications for the quarters ahead.<\/p>\n
\u201cOur view is that September quarter GDP growth was already tracking better than the RBNZ\u2019s [very soft] forecast, and there are aspects of today\u2019s figures that could see an offsetting bounce next quarter, further boosting the reported growth rate.\u201d<\/p>\n
Finance Minister Nicola Willis said the GDP data reflected the impact that global uncertainty has had on consumers and businesses.<\/p>\n
\u201cThe economy had been growing strongly in the previous six months, but suddenly had the stuffing knocked out of it. <\/p>\n
\u201cI feel for people and businesses who have been affected.\u201d<\/p>\n
Willis said there were signs the economy was growing again.<\/p>\n
\u201cLower interest rates are filtering through the economy. <\/p>\n
\u201cThere is evidence of increased mortgage lending.<\/p>\n
\u201cAnd the impact of tariffs has not been as disruptive as initially feared.\u201d<\/p>\n
Willis added that the outlook for most export sectors remained positive.<\/p>\n
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the <\/b>Herald<\/b> in 2011.<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"The fall followed a revised 1.2% rise in GDP in the March quarter. For the June year, Stats…\n","protected":false},"author":3,"featured_media":235302,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[126379,64,3432,9215,91908,79,27223,126380,31647,52274,4155,9106,635,27224,2031,19153,388,110446,4370,1702,67,132,68,70368,27230,64497],"class_list":{"0":"post-235301","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-126379","9":"tag-business","10":"tag-data","11":"tag-domestic","12":"tag-drops","13":"tag-economy","14":"tag-expectations","15":"tag-fell","16":"tag-gdp","17":"tag-gros","18":"tag-june","19":"tag-market","20":"tag-new","21":"tag-nz","22":"tag-over","23":"tag-product","24":"tag-quarter","25":"tag-reduction","26":"tag-show","27":"tag-stats","28":"tag-united-states","29":"tag-unitedstates","30":"tag-us","31":"tag-well","32":"tag-zealand","33":"tag-zealands"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/235301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=235301"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/235301\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/235302"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=235301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=235301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=235301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}