A Genuine Upside Surprise

Franchises will be among many businesses relieved to hear that New Zealand is officially out of recession, with our gross domestic product (GDP) rising 0.7% in the December 2024 quarter, according to the Stats NZ release today.

Westpac's senior economist Michael Gordon said, "The December quarter result was ahead of our [optimistic] forecast of +0.5%. We’d call this a genuine upside surprise, in the sense that the growth was driven more by real activity and less by the seasonal issues that we identified in our preview."

Annual growth figures have been falling since September 2023 so the New Zealand economy will need to see sustained growth over the coming year to find that trend reversed. In the 2025 Franchising Confidence Index, released earlier this year, franchisors were optimistic about seeing better results for themselves and their franchisees, but there is currently very uneven improvement across the various industry sectors that are represented by franchising.

The Stats NZ figures (in seasonally adjusted chain volume terms) showed that strong increases in growth were experienced by the accommodation, food and beverage services, recreational, clothing, footwear, and personal accessory retailing, medical and other health services, real estate, rental and hiring services, while the construction, telecommunications, broadcasting and internet publishing sectors showed marked negative growth trends.

Real gross national disposable income rose 1.5 percent in the December quarter with many banks already having cut interest rates in expectation of future OCR cuts. Michael Gordon also warned that, "With the RBNZ’s most recent projections sitting somewhere between two and three more OCR cuts this year, these figures favour our view that it’s more likely to be two."