New Zealand's economy continues to underwhelm, posting 0.2 per cent growth in the final quarter of 2025 with darker storm clouds ahead.
The Q4 result, released by Stats NZ on Thursday, was below both market expectations, at 0.4 per cent, and the Reserve Bank's (RBNZ) prediction of 0.5 per cent.
The figures also confirm the huge political challenge for Prime Minister Chris Luxon, who has pegged his fortunes to reviving the Kiwi economy.
The centre-right leader declared 2025 would be all about "growth, growth, growth", but Thursday's release confirmed annual GDP growth was just 0.2 per cent for the year.
ASB senior economist Kim Mundy said the recovery was yet to take off.
"The data highlight that while the economic recovery continued into Q4 2025, the economy was still fragile, with private demand noticeably lacking from the equation," she said.
New Zealanders have endured one of the most challenging post-pandemic recoveries of any developed nation, with activity and confidence squashed by a long run of interest rate rises.
While the RBNZ has since squashed rates to stimulate activity, unemployment is at an 11-year high of 5.4 per cent, and inflation is again raising its head.
Consumers price index inflation is now out of the RBNZ's target band at 3.1 per cent, with food price rises at 4.5 per cent.
There are widespread fears that inflation could worsen owing to supply chain disruptions arising from the US-Israel attacks on Iran.
Should that eventuate, the RBNZ would find itself in the invidious position of considering rate hikes that could crush the fledgling Kiwi economy's revival.
"Both global and New Zealand growth could go south from here," Kiwibank economist Sabrina Delgado said.
