Stats NZ said the fewer restrictions on activity in the September quarter was the key that led to the jump from an 11% dip in the June quarter.
Gross domestic product (GDP) is the value of all goods and services produced across the economy.
"This resulted in the strongest quarterly growth in GDP on record in New Zealand, as the economy bounced back from the lockdown earlier in the year when non-essential businesses closed,” Stats NZ national accounts senior manager Paul Pascoe said.
GDP was also up compared to the same September quarter last year and Mr Pascoe said that was an indication the country had returned to a pre-Covid level of activity.
"However, the effects of Covid-19 have had specific and varied impacts at industry level and, for some industries, these may persist for some time."
There was also a 2.2% drop in GDP for the year to September, the largest decline recorded by Stats NZ.
In the breakdown of industries, services — producing about two thirds of New Zealand’s GDP — rose 11.1% after a 9.8% drop in the June quarter.
Goods-producing industries grew 26% and primary industries 4.6%, after falling 15.9 and 7.1% in the June 2020 quarter respectively.
The industries contributing the most to quarterly growth included retail trade and accommodation, up 42.8%; construction, up 52.4%; and manufacturing, up 17.2%.
"Retail sales values recorded the largest September 2020 quarter rise since the series began in 1995, as people spent more on household goods, cars, and food, while residential building was at the highest-ever levels by volume," Mr Pascoe said.
"Accommodation, restaurants, and bars have also been affected by New Zealand’s border being closed to international travellers since mid-March. This sub-industry is down 11.8% through the year to September 2020."
University of Otago economics senior lecturer Dr Murat Ungor said the big jump in production was not a surprise and largely due to fiscal stimulus and the lifting of virus-related restrictions.
He said that growth was repeated across most major economies around the world.
"One dramatic example is India," Dr Ungor said.
"GDP in India rebounded by 21.9%, following a fall of 25.2% in the second quarter, the sharpest drop ever recorded."
China was the only major country recording positive growth in the second quarter of 2020, Dr Ungor said.
It reflected the earlier onset of the pandemic in China and subsequent recovery.
The quarter-on-quarter growth of quarterly GDP in China was negative 10% in the first quarter of the year, but it was up 11.7% in the June quarter and growth continued into the most recent period, up 2.7%.
"China showed a strong recovery in the second quarter of 2020, whereas all other major countries rebounded in the third quarter of 2020."
The pattern of a sharp drop in the second quarter followed by a jump in the third quarter has occurred in many countries, but it did not indicate a full recovery, Dr Ungor said.
"The GDP in the United States rose by 7.4% in the third quarter, a sharp reversal from the second-quarter plunge of 9%."
He said the White House noted GDP in the US remained below what it was at the corresponding time last year.
