Q1 GDP is the last clean read before the oil shock hits
New Zealand's Q1 2026 GDP data, due Thursday, is expected to confirm the economy was building momentum early in the year — but bank economists are united in warning that the result is a lagging snapshot of a pre-shock economy. The numbers that follow will be more consequential for borrowers and brokers.
Forecasts from ANZ, Westpac, BNZ, and Kiwibank converge on quarterly growth of between 0.7% and 1% for the March quarter. The Iran conflict's spike in oil and fuel prices, which took hold in late February and March, is expected to weigh heavily on the June quarter — with some banks already pencilling in a contraction.
Q1 GDP NZ: tourism and manufacturing lead, construction lags
Despite a surge in building consents, actual construction fell 3.5% in the quarter — a number that surprised all four banks.
BNZ noted the decline "was against uniform expectations of a decent gain," with both residential and non-residential building contracting. Westpac flagged that residential activity was tracking substantially below the RBNZ's own May Monetary Policy Statement forecast of a 5.0% gain.
Tourism-linked industries were the standout performers, with transport, accommodation, arts and recreation all pointing higher as international visitor numbers continued their post-COVID recovery.
Manufacturing contributed too, with ANZ and Westpac both highlighting strong food processing from higher milksolids collections and a rebound in fruit and wine production.
Westpac also noted that seasonal distortions in the official methodology are expected to add around 0.4 percentage points to the headline result — meaning the underlying growth picture is closer to 0.6% even on the more optimistic end of forecasts.
NZ OCR July 2026: why Thursday's GDP print is the deciding factor
Beneath the headline number, the OCR question looms larger. Thursday's GDP release is the last major data point before the RBNZ's 8 July OCR review, and its implications for mortgage rates are significant. The RBNZ came within a split decision of hiking in May, and its own forecast aligns with ANZ and Westpac at 1.0% q/q growth.
ANZ's Matthew Galt noted that "if GDP growth comes out in line with our forecast, it will shore up prospects of an OCR hike in July" — a move that would tighten borrowing capacity and lift repayments for clients across the country. BNZ's lower 0.7% estimate, which incorporates the full force of the construction surprise, represents a meaningful potential downside miss that could give the RBNZ pause.
Kiwibank economist Alexandra Turcu was candid about the limitations of the release: "The Q1 GDP data will strengthen or weaken the RBNZ's resolve to hike rates in July. A weaker GDP print coming into the year means weaker demand and thus lower inflation pressure before the oil crisis." The Kiwibank report described the Q1 release as the calm before the storm — useful context for where the economy started, but not where it is heading.
Mortgage rate outlook: what brokers need to know before July 8
Westpac incorporated a 0.3% contraction in GDP for the June quarter in its recent Economic Overview, while BNZ pointed to the combined PMI/PSI activity indicator sitting at 48.6 in April — below the 50 threshold that separates expansion from contraction — as a signal that clients were already facing a weakening economy as Q2 began. Kiwibank noted the June quarter data will be "the important stuff."
As Galt put it: "timely data suggests momentum has slowed since Q1, but it is looking more like a stall than an abrupt contraction at this stage."
For brokers advising clients on the timing of loan decisions ahead of July 8, a GDP result in line with ANZ and Westpac's forecasts would, by ANZ's own assessment, make a rate hike the most likely next move. A downside surprise could delay it — but with inflation tracking well above target and oil prices elevated, the direction of travel on the OCR remains upward.
For the full research, brokers can access the source reports at ANZ Research, Westpac Economics, BNZ Research, and Kiwibank Economics.
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