Economic activity rose 0.2% in the December 2025 quarter, at the lower end of expectations.  The Reserve Bank had forecast growth of 0.5%.  Economists expected it to be between 0.2% and 0.4%.  The rise followed a 0.9% rise in the September 2025 quarter, Stats NZ said.  That third-quarter figure was revised down from the 1.1% reported in December.  On an annual basis, GDP was up 0.2% to December 2025, compared with the year ended December 2024.  The primary sector led the growth with a rise of 0.9% for the quarter.  Construction was the worst performing sector - down 1.4%  Earlier  GDP was a lagging measure at the best of times, but this would be amplified this time, given the war in the Middle East, said ASB senior economist Kim Mundy.  “The economic consequences for New Zealand from the war depend on how long it lasts, but so far, the risks to economic growth are firmly skewed to the downside.”  Nevertheless, the fourth-quarter data remained important as a signal for the current direction of travel, she said.  “We expect the data to show that the economic recovery continued into the end of 2025, just with a little less vigour than in [the third quarter].”  On a per-capita basis, GDP looked to have expanded 0.2% quarter on quarter, the second consecutive lift.  “Growth in per-capita GDP is consistent with things starting to feel a bit easier at a household [and] business level,” Mundy said.  “But with per-capita GDP still 3% below the peak, there’s still some way to go on this road to recovery.”  All the bank economists’ forecasts are weaker than the Reserve Bank’s February pick of 0.5% growth.  Kiwibank and BNZ are expecting 0.3% growth for the quarter.  “Most industries are set to post gains. But the standout looks likely to be sectors tied to tourism,” said Kiwibank economist Sabrina Delgado.  “It was another quarter of strong visitor arrivals with plenty of indicators pointing to a lift in transport, arts and rec, and retail trade and accommodation. But it’s not all sunshine, with construction still dragging behind.”  The agricultural sector has driven economic growth in the past year.  ANZ’s Matthew Galt took the gloomiest view, picking growth of 0.2% for the quarter.  But a downside surprise to the RBNZ’s GDP forecast of that size would have only a small impact on its thinking, he said.  “GDP is lagged data that is prone to revision and covers a period long before oil prices spiked.  “At the margin, this downside surprise would give the RBNZ a little more latitude to look through the near-term inflationary impact of the oil shock.  “But the main factor for the monetary policy outlook is how the conflict in the Middle East, and the resulting impacts on medium-term inflation and growth, play out from here.”  Higher oil prices were not good for either inflation or activity, he said.  “However, the extent of the impact depends critically on how long the conflict and trade disruption lasts, as well as the balance of how it impacts medium-term inflation versus medium-term growth, which is all still very uncertain.”  In February’s Monetary Policy Statement, the RBNZ estimated there was considerable spare capacity in the economy, with an output gap of -1.5% in the fourth quarter, Galt said.  “At face value, a downside surprise to GDP would imply it is now wider than the RBNZ had assumed. That would help contain second-round inflation impacts.  “However, we wouldn’t want to overplay this given the uncertain outlook, and also recalling that annual inflation at 3.1% isn’t coming from an entirely comfortable starting point.”  Given all that had happened in the global economy in recent weeks, it would be “a pretty high bar” for the fourth-quarter GDP to move the dial on the Official Cash Rate call, he said.  Liam Dann is business editor-at-large for the New Zealand Her...