The beat gives the RBNZ some cover on growth just as it continues a hiking cycle built primarily around inflation rather than activity, having already lifted the OCR to 2.75% this month for a second straight meeting despite a weak growth backdrop. That combination, a central bank tightening into resilient rather than deteriorating growth, is arguably more useful for the Kiwi than the data surprise itself. Even so, NZD/USD barely moved, ticking up to $0.5724 from $0.5718, with the broader US dollar strength that followed this week's Fed hike offsetting the local beat. That leaves NZD reaction skewed toward external drivers for now, and Westpac's point that inflation data, not growth data, is what will actually decide the RBNZ's next move suggests the currency's next real trigger sits with upcoming CPI prints rather than anything in Thursday's GDP release.---New Zealand's economy beat a gloomy RBNZ forecast, but the currency barely noticed with the Fed hike still calling the shots.Summary:NZ Q2 GDP rose 0.2% q/q, beating the 0.1% forecast and the RBNZ's own flat projection; annual growth came in at 2.6% versus 2.2% expectedGrowth slowed from an upwardly revised 0.9% q/q pace in Q1, as the US-Iran conflict weighed on confidenceWestpac's Michael Gordon said the economy has largely held its ground through the conflict, though not entirely unscathed, and that this should ease some RBNZ concerns about downside growth riskThe RBNZ hiked the OCR 25bps to 2.75% earlier this month, its second consecutive hike, with inflation still above target; Westpac says inflation data, not growth, remains the key driver of the next moveNZD/USD ticked up only slightly to $0.5724 from $0.5718, with gains capped by broader dollar strength following the Fed's rate hikeKiwibank called the result solid given the oil crisis backdrop but noted NZ still posted the weakest growth among peer countries Stats NZ benchmarks against; the data lands amid a tight November 7 election campaignNew Zealand's economy grew more slowly in the second quarter than in the first, but the result still beat expectations, easing some of the Reserve Bank of New Zealand's concerns about downside risks to growth. Statistics New Zealand data released Thursday showed GDP rose 0.2% quarter on quarter, ahead of the 0.1% forecast by analysts and well above the RBNZ's own projection of no growth at all. That marked a slowdown from an upwardly revised 0.9% pace in the first quarter, previously reported as 0.8%, as the fallout from the US-Iran conflict weighed on confidence. Annual growth came in at 2.6%, comfortably above the 2.2% the market had expected.Westpac said the data reinforced the message that New Zealand's economy had largely held its ground through the conflict, though it has not been completely unscathed. Added the result should help ease some committee members' concerns about downside risks to growth, though Westpac continues to view inflation indicators, rather than growth, as the key input for the RBNZ's next move. That framing matters because the central bank has already been hiking despite a soft growth outlook, lifting the official cash rate by 25 basis points earlier this month for a second consecutive meeting, to 2.75%, as inflation stayed above its target range. The RBNZ has said it expects the recovery to strengthen and broaden out from here, and Thursday's beat gives that call some early support.The currency reaction was more muted than the headline beat might suggest. The New Zealand dollar ticked up only slightly to ~0.5723 US dollars from 0.5718 on the data, with gains capped by the broader pressure the currency remains under following the Federal Reserve's rate hike this week, which has kept the US dollar firm across the board.Results were mixed beneath the headline number, with Statistics New Zealand noting only nine of 16 industries grew in the quarter, construction the standout performer. Kiwibank economists called the outcome a good one given the backdrop of the Middle East driven oil crisis, but noted New Zealand still posted the weakest growth among the nine other countries and country groups Statistics New Zealand benchmarks it against, adding that the path from here depends on whether the momentum carried into June holds up. The data also lands in the middle of an election campaign, with the economy a central battleground ahead of the November 7 vote. This article was written by Eamonn Sheridan at investinglive.com.