In the closing months of 2022, New Zealand offered a rare piece of economic good news to a world bracing for contraction — its economy grew 2 percent in a single quarter, nearly doubling the most optimistic forecasts. Driven by the return of tourists and a busy construction sector, the country found itself 7.9 percent larger than it was before the pandemic, outpacing peers like Australia, the United States, and the United Kingdom. Yet even as officials acknowledged the strength, they were careful to name what lay ahead: a slowdown, and likely a shallow recession, waiting just beyond the horizo
New Zealand GDP surges 2% as tourism and construction drive growth
The economy is 7.9% larger than before the pandemic struck
Mark
So New Zealand beat expectations by nearly a full percentage point. What made the difference?
Mimi
Two things mainly—tourists came back in real numbers once the borders fully reopened, and construction spending picked up. The services sector, which is most of the economy, grew 2 percent just from people traveling and spending again.
Luke
But we should note that government spending actually contracted. So the growth wasn't broad-based across all sectors—it was concentrated in tourism and construction and business investment.
Mimi
That's fair. The government deliberately pulled back on spending to help control inflation. So the growth happened despite fiscal tightening, not because of it.
Mark
How does New Zealand compare to other developed countries right now?
Mimi
On an annual basis, they're at 6.4 percent growth. Australia is at 5.9, the US at 1.9, the UK at 2.4. New Zealand is outperforming most of its peers.
Luke
Though we should be careful about reading too much into one quarter. The officials themselves are saying they expect activity to slow from here and that a shallow recession is forecast. This is a strong moment, but it's not a signal that the economy is out of the woods.
Mark
What's driving the caution?
Mimi
Global conditions. High inflation, the Ukraine war, ongoing pandemic disruptions. New Zealand is doing well, but the world around it is volatile.
Luke
And the officials are explicitly warning that momentum won't last. They're preparing people for a slowdown.
Mark
So this is good news, but temporary good news?
Mimi
It's good news that shows the economy has real resilience. But yes, officials are being honest that headwinds are coming.
Der Puls
- New Zealand's 2% quarterly growth blindsided forecasters who had expected no more than 1.3%, signaling an economy moving faster than almost anyone anticipated.
- The reopening of borders unleashed a wave of tourist spending that energized the services sector — two-thirds of the entire economy — while construction and dairy exports added further fuel.
- Even as growth surged, the government deliberately pulled back its own spending by 1.8% to keep inflation from running hotter, threading a needle between stimulus and restraint.
- Measured against peer nations, New Zealand's 6.4% annual growth rate left Australia, the US, the UK, Japan, and the Euro area behind, placing it at the top of a difficult global leaderboard.
- Officials are already warning that the good times have a shelf life — a shallow recession is expected in the medium term, and the question is whether today's resilience can soften tomorrow's landing.
In the closing months of 2022, New Zealand offered a rare piece of economic good news to a world bracing for contraction — its economy grew 2 percent in a single quarter, nearly doubling the most optimistic forecasts. Driven by the return of tourists and a busy construction sector, the country found itself 7.9 percent larger than it was before the pandemic, outpacing peers like Australia, the United States, and the United Kingdom. Yet even as officials acknowledged the strength, they were careful to name what lay ahead: a slowdown, and likely a shallow recession, waiting just beyond the horizon.
New Zealand's economy grew 2 percent in the September 2022 quarter, a result that caught most forecasters off guard. Predictions had clustered between 0.7 and 1.3 percent. The actual figure arrived well above that range, carried by a surge in returning tourists and a construction sector in full stride — the second consecutive quarter of strong gains, following 1.9 percent growth in June.
With borders fully reopened, the services sector grew 2 percent, business investment climbed, and dairy and meat exports strengthened. All of this unfolded even as central government spending fell 1.8 percent — a deliberate effort to cool inflation pressures. The economy had grown to $375 billion and was now 7.9 percent larger than before the pandemic, putting New Zealand ahead of Australia, the United States, Canada, Japan, and the United Kingdom in pandemic recovery.
Finance Minister Grant Robertson pointed to low unemployment, export growth, and tourism's rebound as signs of real underlying strength. On an annual basis, New Zealand's 6.4 percent growth outpaced the OECD average of 2.5 percent and left most peer nations well behind.
Still, officials stopped short of declaring victory. Inflation remained elevated globally, the war in Ukraine continued to disrupt supply chains, and forecasters expected momentum to fade after the December quarter. A shallow recession was seen as likely in the medium term. The central question was whether the country's current strength could serve as a cushion against the downturn that most analysts believed was already on its way.
New Zealand's economy expanded by 2 percent in the three months ending September, a result that caught most forecasters off guard. Economists had predicted growth somewhere between 0.7 and 1.3 percent. The actual figure landed well above that range, driven by a surge in visitor arrivals and a construction sector firing on all cylinders.
The expansion marked the second consecutive quarter of solid gains—the June quarter had posted 1.9 percent growth—and it arrived at a moment when much of the developed world was bracing for contraction. New Zealand's economy had grown to $375 billion in size and was now 7.9 percent larger than it had been before the pandemic struck. That put the country ahead of Australia, the United States, Canada, the Euro area, Japan, and the United Kingdom in terms of how much ground it had recovered.
Tourists returning in meaningful numbers accounted for much of the momentum. With borders fully reopened to all visitors, the services sector—which represents two-thirds of the economy—grew 2 percent. Business investment climbed as well. Dairy and meat exports strengthened. Construction activity picked up. These gains came even as central government spending fell 1.8 percent in the September quarter, a deliberate move aimed at cooling inflation pressures that were running hot across the global economy.
Finance Minister Grant Robertson framed the result as evidence that the government's economic strategy was working. He pointed to low unemployment, growing exports, and the rebound in tourist numbers as signs of underlying strength. On an annual basis, the economy had expanded 6.4 percent compared to the same quarter a year earlier—a pace that outpaced Australia's 5.9 percent, Canada's 3.9 percent, the Euro area's 2.3 percent, Japan's 1.7 percent, the United Kingdom's 2.4 percent, and the United States' 1.9 percent. The OECD average stood at 2.5 percent.
But Robertson and other officials were careful not to declare victory. The global environment remained treacherous—inflation remained elevated, the war in Ukraine continued to disrupt supply chains, and pandemic aftershocks still rippled through economies worldwide. Economic indicators suggested momentum had carried into the December quarter, but forecasters expected activity to slow after that. A shallow recession loomed in the medium term. Robertson said the government would continue supporting New Zealanders facing cost-of-living pressures while managing public finances responsibly, a balancing act he described as essential to building long-term resilience. The question now was whether the current strength could cushion the country against the downturn that most analysts believed was coming.
Bemerkenswerte Zitate
The growth has been led by business investment and return of tourists, while central government spending was down 1.8 percent in the September quarter.— Finance Minister Grant Robertson
There are signs however that activity will slow from there.— Finance Minister Grant Robertson
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