Westpac says New Zealand economy will dodge recession but face rocky year
Westpac's latest economic forecast projects that New Zealand will avoid recession in 2026 but growth will be limited to 0.8%. The bank flagged the impact of the Iran conflict on energy and food prices as the chief risk. The central bank is expected to continue cutting rates.
In its quarterly economic outlook released Tuesday, Westpac said New Zealand will register annual growth of 0.8% through 2026 and that household consumption will remain under pressure. The bank projects unemployment will peak around 5.4% in the middle of the year.
The report identifies the impact of the Iran conflict on energy and food prices as the primary risk. It nonetheless flags the export sector, particularly dairy and meat demand in Asian markets, as expected to remain resilient. The export price index is projected to rise about 5% in 2026.
The Reserve Bank of New Zealand is expected to lower its policy rate from the current 3.5% to 2.75% by year-end. Westpac warned that the governor's speech next month will be critical for the direction of monetary policy. The New Zealand dollar closed broadly flat against the US dollar.
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