Source: Employers and Manufacturers Association
The EMA (Employers and Manufacturers Association) says today’s GDP figures, showing 0.2% growth in the June quarter, indicate the economic recovery remains on track despite the impact of the conflict in the Middle East during the quarter.
“When you consider the massive spike in petrol and diesel prices in April, it’s positive that the economy grew at all during the quarter,” says EMA Head of Advocacy Alan McDonald.
“Annual GDP growth for the year ended June 2026 was 1.7%, which is a solid result given the pressures businesses have faced over the past 12 months.
“The June quarter was particularly testing, with energy costs weighing on business confidence. Against that backdrop, even modest growth demonstrates a level of resilience that can’t be overlooked.”
McDonald says many businesses developed contingency plans amid concerns about potential fuel shortages and supply chain disruption following developments in the Middle East.
“There was genuine concern across the business community about how severe the impacts might be. While prices rose sharply and continue to place pressure on businesses, the worst-case scenarios did not eventuate.
“The Government provided reassurance about fuel availability and managed the situation effectively. This helped businesses avoid widespread disruption and supported a faster-than-expected recovery in confidence.”
Recent inflation data shows fuel costs adding to existing pressures and creating challenges for firms already operating on tight margins. Inflation has risen to 4.1%, driven in part by a 71% increase in diesel prices and a 27% increase in petrol prices. The fact that the economy continued to grow highlights the recovery is coming.
McDonald said business feedback from the EMA’s recent regional briefing round suggests a more optimistic outlook is emerging.
“While many businesses are telling us it’s still tough, there is increasing evidence that firms are beginning to look ahead with greater confidence than they were six months ago.”
“Much of the current strength is being driven by the success of our primary industries, but we’re also seeing a growing strength in the performance of the manufacturing sector.
“We’ve now seen growth in three successive quarters, albeit cautious growth. Businesses now need certainty, stability and confidence for growth to continue and to start hiring and investing.”
One of New Zealand’s longer-term economic challenges remains ensuring workers have the skills required by employers, McDonald says.
“We need to remain focused on preparing young people for work and helping more New Zealanders successfully enter the workforce.”
“We also need to think about how we continue upskilling and retraining workers throughout their careers. Strong economic growth ultimately depends on having the skilled workforce businesses need to succeed.”
The EMA expects economic conditions during the September quarter to provide a clearer picture of the strength of the recovery and remains cautiously optimistic about the outlook for growth over the coming year.