The result was stronger than many expected.
Finance Minister Grant Robertson said global economic activity is expected to continue to recover, although the pace of recovery was likely to be uneven.
"The full economic effects of Covid-19 are still to be felt in New Zealand and across the world," Robertson said in a statement.
Stats NZ data showed that in the September quarter, the economy was up 0.4 per cent on year-ago levels, compared to market expectations centred of a decline of around 1.8 per cent.
"The NZ economy looks to have been even more resilient than expected and has recovered from the impact of the lockdown earlier this year, with quarterly GDP now above pre-Covid levels," ASB Bank said in a commentary.
"This is a phenomenal result, and an achievement made by very few other countries in 2020."
The current fourth quarter looked promising. "However, there are a number of headwinds, and this summer will test many tourist operators with international borders still effectively closed," ASB said.
"Nonetheless, there is light at the end of the tunnel, with travel bubbles back on the agenda for early 2021 and the first wave of vaccines set to roll out over the coming months," the bank said.
Kiwibank chief economist Jarod Kerr said the result was "as close as you get to a true V-shaped recovery".
"It's clear that 95 per cent of our economy is performing particularly well. But we must spare a thought for the other 5 per cent," Kerr said.
"The true test of the tourism and education sectors is right now, over the peak summer season."
Kerr added that there was a risk that economic activity would decline over the fourth quarter, or the first quarter of next year.
Stats NZ, in today's release, revised the June quarter contraction to 11 per cent from 12.2 per cent.
There were fewer restrictions on activity in the September 2020 quarter than during the COVID-19 lockdown-impacted June 2020 quarter, though Auckland was at alert level 3 in August, Stats NZ said.
"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," national accounts senior manager Paul Pascoe said in a statement.
While the quarterly result looked impressive, it followed a record fall in the June 2020 quarter.
"Even though activity across the country largely returned to pre-COVID-19 levels, we haven't recouped all the activity or production lost as a result of the lockdown in the June 2020 quarter," Pascoe said.
Service industries, which produce about two-thirds of New Zealand's GDP, rose 11.1 per cent in the quarter, after declining 9.8 per cent in the June 2020 quarter.
Goods-producing industries grew 26.0 per cent and primary industries 4.6 per cent, after falling 15.9 and 7.1 per cent in the June 2020 quarter respectively.
The industries contributing the most to quarterly growth included retail trade and accommodation, up 42.8 per cent; construction, up 52.4 per cent; and manufacturing, up 17.2 per cent.