New Zealand Economy Beats Expectations with Modest Q2 Growth

New Zealand's economy expanded more than expected in Q2, growing 0.2% quarter-on-quarter and 2.6% year-on-year. The growth exceeded market expectations of a 0.1% quarterly increase and the Reserve Bank of New Zealand's forecast of no growth.

The stronger-than-forecast growth comes despite lingering headwinds from the Middle East conflict, which has driven up oil prices and created economic uncertainty. The U.S.-Israel war with Iran weighed on New Zealand's economy in Q2.

In response to this uncertainty, the Reserve Bank of New Zealand raised the official cash rate by 25 basis points to 2.75% earlier this month. This marked the second consecutive meeting with an increase, as the central bank expects economic recovery to strengthen and become more broad-based.