New Zealand's Economic Growth Slows Sharply as RBNZ Warns of Dovish Repricing

New Zealand's economic growth is expected to slow sharply in Q2, according to Brown Brothers Harriman (BBH). The country's GDP growth rate is projected to be just 0.1% quarter-over-quarter (q/q) after a strong 0.8% growth in Q1.

The slowdown is attributed to higher fuel prices, elevated uncertainty, and falling house prices, which have reduced domestic spending and growth. Despite this, leading indicators suggest a recovery in Q3.

The Reserve Bank of New Zealand (RBNZ) projects a relatively low policy rate peak at 3.25% in 2028, which is below the top end of its nominal neutral range estimate between 2.3% and 4.1%. This gap leaves room for dovish repricing that could drag on the New Zealand Dollar.