Economists expect New Zealand's March quarter GDP to grow around 1%, but the data will largely predate the Middle East conflict that broke out in February — and the full economic impact is expected to show up in later releases.
New Zealand's first-quarter GDP figures land next Thursday, and economists are already describing them as the calm before the storm.
The March quarter data — covering January to March — will show how the economy was tracking before the conflict in the Middle East began in February. Economists surveyed by interest.co.nz are forecasting around 1% growth for the quarter, matching the Reserve Bank's own projection and up from the 0.2% growth recorded in the December quarter.
The timing of the data release matters because it will establish the "starting position" for the New Zealand economy before the global oil shock resulting from the Middle East conflict began feeding into prices and consumer behaviour.
What the forecasts show
ANZ is forecasting 1% GDP growth for the March quarter, up from its earlier 0.9% estimate. ANZ senior economist Matthew Galt said the figures would signal how much momentum the economy had before the Middle East conflict broke out. "Timelier data shows that momentum has slowed markedly since the period covered by Q1 GDP. Higher fuel prices and economic uncertainty have clearly had an impact. However, at this stage it is looking more like the economy has stalled than gone rapidly backwards," Galt said.
Westpac has similarly raised its forecast from 0.8% to 1%, citing strong sectoral data released during the week — but with two important caveats. The first is seasonal distortion: the methods used to calculate total GDP result in a "balancing item" that in recent years has been unusually large and strongly seasonal, meaning the reported result will overstate the underlying pace of growth.
The second caveat is that the March quarter data will largely predate the US-Iran conflict. Westpac senior economist Michael Gordon said the effects of the conflict were expected to become more apparent in the data over the coming months, with the bank incorporated a 0.3% fall in GDP for the June quarter into its forecasts.
BNZ is casting its GDP forecast slightly lower at 0.9%, noting the figures would essentially set the starting point for measuring whatever comes next.
What this means for households
The Q1 GDP data will matter for anyone tracking where the New Zealand economy goes from here — and by extension, where interest rates go.
House prices have been drifting sideways, with flat data for May continuing a sluggish start to 2026, according to Cotality chief property economist Kelvin Davidson. "Interest rates have already lifted in recent months and there's likely to be more to come the longer the Iran conflict continues. At the same time, consumer and business confidence has been hit hard, and there are other signs of economic weakness coming through, such as falls in retail spending."
For mortgage holders, the GDP data will be watched closely by the Reserve Bank as it sets the OCR. A stronger-than-expected result could reduce the urgency for OCR cuts, while a weak result — particularly in the June quarter data expected later — could accelerate that direction.
The immediate picture from Q1 GDP is expected to be solid but misleading: the economy had momentum before the Middle East conflict and global fuel shock arrived, but that pre-conflict strength will not tell the full story of what households and businesses are now navigating.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.