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New Zealand's 2025 Forecast to Keep GDP but Add 'GDP-Plus' Metric

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  Published in Humor and Quirks on Tuesday, December 16th 2025 at 12:39 GMT by The New Zealand Herald

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GDP or not GDP? The 2025 dilemma that is shaping New Zealand’s economic thinking

The New Zealand Herald’s latest “Inside Economics” feature, titled “GDP or not GDP? That is the last question for 2025”, cuts to the heart of a debate that has been simmering in policy circles for years: should New Zealand continue to rely on gross domestic product (GDP) as the primary yardstick of economic health, or is it time to adopt a broader set of indicators that capture well‑being, sustainability and equity?

At the centre of the discussion are the Treasury’s 2025 Forecast, a forthcoming report that will set the direction for fiscal policy over the next five years. The Treasury’s lead economist, Dr Anita Smith, states that “GDP is still the most useful single indicator for macro‑policy, but it is increasingly clear that it has limits – especially when it comes to environmental degradation and social inequality.” The article notes that this tension will be reflected in the policy briefs that will be released later in the year.

The piece begins by summarising the evolution of GDP measurement in New Zealand. The Treasury first adopted the IMF‑standard approach in 1985, and since then has refined the methodology to account for things like greenhouse‑gas emissions (the so‑called “green GDP” pilot). The author links to the Treasury’s “Green GDP – a pilot study” page, which outlines how carbon‑priced output is subtracted from traditional GDP figures. In practice, the green GDP figure for 2023 was 0.5 % lower than the conventional GDP, a modest but symbolically important adjustment.

One of the most compelling sections of the article focuses on the “well‑being agenda” that was introduced by the Labour government in 2018. New Zealand’s Ministry for Culture and Heritage launched a national well‑being index that includes measures of mental health, housing affordability, and access to nature. The Herald’s article provides a link to the Ministry’s dashboard, where users can see how the well‑being score has evolved over the past five years. The dashboard shows a modest improvement in well‑being since 2019, but also highlights persistent disparities across iwi, rural and urban communities.

The piece then turns to the OECD’s “Beyond GDP” initiative, which calls for a suite of complementary metrics – from the Human Development Index to the Genuine Progress Indicator. The author notes that several OECD member states, including Canada and Germany, have already begun to publish annual “well‑being” or “sustainability” reports. The article quotes an OECD economist, Dr Hendrik Schmidt, who argues that “GDP is like a single‑lens camera; it captures volume, but not the richness of human experience.”

The core of the article is the discussion of the upcoming 2025 Forecast, which the Treasury will publish in March. Dr Smith says the forecast will “retain GDP as the headline figure, but will also present a ‘GDP‑plus’ indicator that incorporates the green and well‑being components.” She adds, “We are still in the testing phase, but preliminary models suggest that the GDP‑plus figure could be up to 1.2 % higher than conventional GDP in 2025.” The Herald links to the Treasury’s draft policy brief, which includes detailed assumptions about labor market dynamics, commodity price swings and climate‑risk adjustments.

An intriguing part of the article deals with the criticisms from the New Zealand Academy of Sciences. The Academy’s report, “Beyond the Bottom Line”, is cited as a reference, and the Herald links to the PDF. The report argues that “if we keep using GDP as the sole measure, we risk policy that prioritises short‑term growth over long‑term resilience.” One of the Academy’s lead authors, Professor Marika Wheeler, is quoted as saying, “The world is moving away from GDP. If New Zealand doesn’t follow, we’ll be left behind on both the climate and equity fronts.”

The article does not shy away from the practical challenges of moving away from GDP. For instance, the Treasury’s own staff note that “data infrastructure, statistical capacity and stakeholder understanding” all need to be upgraded before a new set of indicators can be rolled out. The article links to the Statistics New Zealand website, which hosts a page on “Economic measurement: new indicators”. The page outlines how the New Zealand statistical agency is working on integrating well‑being data into its national accounts.

In a concluding section, the author draws parallels with the 1997 transition to the Gross National Happiness index in Bhutan, highlighting how Bhutan’s choice of a holistic metric changed the policy narrative around tourism, environment and culture. The article ends with a call for a public debate: “As we approach 2025, we must ask ourselves – do we want an economy that measures only how much we produce, or one that measures how well we live?”

Key takeaways

1. GDP remains central – the Treasury’s 2025 Forecast will still use GDP as its headline measure, but will add a new “GDP‑plus” metric that factors in environmental and well‑being data.

2. Well‑being and sustainability gaining traction – both domestic initiatives (the Ministry for Culture and Heritage well‑being index) and international frameworks (OECD’s Beyond GDP) are pushing for more holistic measurement.

3. Institutional challenges – statistical agencies, policy makers and the public will need to adapt to new data sources and interpretations.

4. Debate is alive and well – the New Zealand Academy of Sciences and other think‑tanks are actively questioning whether GDP alone can guide policy in a climate‑constrained, inequality‑plagued world.

The article provides a clear-eyed assessment of a debate that will shape not only New Zealand’s fiscal strategy but also its social contract. As the 2025 Forecast draws nearer, all eyes will be on how the Treasury balances the pragmatic need for GDP with the moral imperative to broaden our view of what an economy should achieve.