Moody's Says New Zealand Economy Emerging from Stagnation with Support

New Zealand's economic recovery is underway, according to ratings agency Moody's. The country's strong institutions and robust regulatory frameworks will support the recovery, which has been driven by strong agricultural export prices, recovering tourism, and the effects of earlier monetary easing.

However, there are concerns about the impact of a rates cap, which could limit councils' ability to invest in infrastructure. Moody's also notes that cost of living issues and fiscal constraints will create different outcomes for different parts of the economy.

The agency expects real GDP growth of 1.6 percent in 2026, with potential for more if business confidence and investment intentions translate into stronger spending in the second half of this year. Growth is expected to broaden to 2.3 percent in 2027 as external demand remains supportive and businesses step up investment.

The recovery is vulnerable to international forces, including geopolitical tensions, global trade risks, El Niño conditions, and election-related uncertainty. Data centres could add at least 2.6 terawatt-hours to annual national electricity demand by 2035, taking total data-centre consumption above 3 terawatt hours.