IMF Sees New Zealand Economy Recovering from Middle East War Impact

The International Monetary Fund (IMF) has completed its Article IV Consultation for New Zealand and published its staff report. The report, which was endorsed by the IMF's Executive Board on August 24, 2026, notes that New Zealand's economy had been finding its footing in early 2026 after a period of stagnation and low growth.

The report states that real GDP expanded by 0.2 percent in 2025, driven by household consumption amid easing debt service costs and favorable export prices. However, the onset of the Middle East war temporarily disrupted global energy markets and supply chains, increasing uncertainty and delaying New Zealand's economic recovery.

Growth is estimated to have contracted in 2026Q2 due to elevated oil prices weighing on household purchasing power and business profitability. However, it is projected to recover in subsequent quarters, averaging 2 percent in 2026 and accelerating to 2.7 percent in 2027 as pent-up demand and business confidence recover.

The report also notes that inflation will temporarily rise to around 4 percent y/y in mid-2026 and remain above the RBNZ's 1-3 percent target band until end-2026, before returning to the midpoint in the second half of 2027 as the oil price shock dissipates.