Maybe switching the camera to macro mode can limit the zoom range available, it happens on some cameras but I'm not sure about yours. If your lens will not retract even when turnnig off the camera, then it looks like a hardware problem. I would contact Panasonic with this.
Macro mode on the FZ18 does not limit the zoom range.
I agree with Bdrey's suggestion to contact Panasonic. But before you do, take the battery out for 5-10 minutes, put in back in and see if the zoom works. You'll lose some settings but it may do the trick.
Make sure the battery is fully charged and clean the contacts before reinserting in the battery compartment.