Iran war could weigh on New Zealand economy for two years, Infometrics warns
New Zealand economic research firm Infometrics said the energy and shipping shock from the Iran war could push local inflation higher by 1.2 percentage points and trim GDP growth by 0.4 points. The impact is expected to stretch across the next two years; tourism and dairy exports are the two most exposed sectors.
In a 28-page report released on Wednesday, Infometrics said the Iran war will affect the New Zealand economy through three main channels: higher energy prices, Asia-Pacific shipping delays and rising insurance premiums. Global container imbalances have already lifted average wait times at Auckland and Tauranga ports by 18%.
According to chief economist Brad Olsen, the rise in fuel prices could reduce household consumption by 0.8% in 2026. In the tourism sector, fares from Australia and the United States have risen 22% on higher fuel costs, and recorded booking cancellations have crossed 8% of forward inventory.
The report said the most critical external pressure is on the dairy supply chain: Fonterra's fertiliser costs are up 14% and packaging costs are up 9%. Olsen said the Reserve Bank's August reassessment of monetary policy will place these risks at the centre. The base case is that the Official Cash Rate stays at 5.25%, but the probability of an additional hike has risen from 35% to 50%.
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