Fresh economic data showing the economy shrank in the June quarter has prompted sharp exchanges between the Government and Opposition over who is to blame and what should come next.

Statistics New Zealand figures released today show Gross Domestic Product fell 0.9 percent in the second quarter of the year, following a 0.9 percent increase in the first three months.

Finance Minister Nicola Willis said the downturn reflected global forces rather than domestic mismanagement.

“International turmoil and uncertainty relating to tariffs clearly had an impact on firms’ and households’ willingness to make investment decisions,” Willis said.

She said the second quarter coincided with the announcement of new United States tariffs and that “suddenly had the stuffing knocked out of” growth after a strong six months.

Willis urged caution in interpreting the figures. “It is important to remember this is backwards-looking data. We are now nearing the end of the third quarter and there are signs the economy is growing again. Lower interest rates are filtering through the economy, there is evidence of increased mortgage lending, and the impact of tariffs has not been as disruptive as initially feared.”

She said forecasters expected growth to strengthen as uncertainty eased and export demand held up.

Labour’s finance and economy spokesperson Barbara Edmonds took a different view, saying the numbers reflected failures of Prime Minister Christopher Luxon and his Government.

“Christopher Luxon stood in front of New Zealanders in 2023 and said his business experience would fix cost of living and the economy. Instead, he has failed dramatically,” Edmonds said.

“Today’s figures prove the damage National’s economic mismanagement is doing across the country. Thousands of jobs are being lost, businesses are struggling to stay afloat, and record numbers of New Zealanders are leaving to find work overseas.”

She said New Zealand was “on the edge of a recession” while Australia’s economy grew 0.6 percent in the same period. “That only highlights the failure of Christopher Luxon and Nicola Willis,” Edmonds said.

Labour promised to focus on building what Edmonds called “an economy that works for everyone” by supporting skills, higher-paid jobs, and keeping young people in the country.