The economy has edged out of recession, driven by service industries and energy production, but economists warn there is little cause for celebration.
Stats NZ data shows gross domestic product -- the broad measure of economic growth -- rose 0.2 percent for the three months ended March, with annual growth of 0.3 percent.
The numbers were stronger than economists had expected and followed two quarters of contraction.
"There were a range of results at industry level with eight of the 16 industries rising this quarter," Stats NZ's Ruvani Ratnayake said.
The main contributors to the gain were rental, hiring and real estate services, and increased electricity generation, but there was also a slight lift in retailing.
The biggest falls were in construction, business services and manufacturing, which was partly offset by increased dairy exports.
The growth in population resulted in each individual's share of the economy shrinking 0.3 percent during the quarter, the sixth consecutive quarterly fall. Annually, the per capita decline was 2.4 percent.
Photo: RNZ / Rebekah Parsons-King
Household spending rose 1.6 percent for the quarter, with evidence that consumers were buying from cheap online retailers.
Government spending was marginally lower, while the "unallocated" category, which includes such items as duties on imports, also boosted the final figure.
Real gross national disposable income, a measure of the country's purchasing power, rose 0.9 percent for the quarter, but was still 1 percent lower than a year ago.
Economy still weak, no rate cuts soon - economists
Economists were unexcited by the data, which they said showed a soggy, weak economy.
"Digging into the details highlights that today's number is another weak outturn by any stretch of the imagination," ASB senior economist Kim Mundy said.
She said the the Reserve Bank's high interest rates policy to get inflation under control has been the chief cause of the economic downturn and recessionary periods.
"With monetary policy set to remain restrictive, we don't think that story is going to change soon."
Westpac senior economist Michael Gordon said the economy was essentially little changed and data for the June quarter offered no relief.
"We expect growth to remain minimal over the course of this year, and indeed recent indicators suggest that the June quarter is shaping up to be quite soft."
ASB's Mundy said RBNZ interest rate cuts would be needed to help lift the economy, but she did not think that would happen while stubborn inflation persisted.
"We continue to expect OCR (official cash rate) cuts from early 2025 by when we expect the RBNZ will have enough evidence that a weaker economic backdrop and importantly a looser labour market will flow through to inflation settling sustainably around the midpoint of the 1-3 percent inflation target range."
Labour's fault - Willis
"The government has a plan to turn things around," Finance Minister Nicola Willis told Midday Report.
"We are forecasting in our recent budget for inflation to come under control, [for] interest rates to drop and growth to recover. It's a long slog we are in."
She said Treasury was forecasting inflation to come back within the target band of 1 to 3 percent this year and "is broadcasting for interest rates to drop after that".
Come 31 July, she said tax relief for New Zealanders would provide welcome relief.
"We're doing our bit as a government. We're being more disciplined about spending.
"Our message to New Zealanders is: hang on better times ahead."
Willis laid the blame for the downturn and state of the economy at the previous Labour government's door.
"While today's data is technically in the positive, it remains a reminder of the reckless spending and economic mismanagement of the previous government."
"New Zealanders are feeling the long shadow of a prolonged period of high inflation, with high interest rates contributing to a deeper and more persistent downturn than previously forecast."
New Zealand first-quarter growth was better than Australia, but lagged that of most of the country's major trading partners.
