New Zealand's economic outlook appears grim, but there may be light at the end of the tunnel. The country's misery index, a measure combining unemployment and inflation rates, has reached 9.5 percent, the highest level in over three years. However, economists predict this figure will start to decline early next year.
Miles Workman, senior economist at ANZ, anticipates the unemployment rate will hold steady at 5.7 percent, while inflation, measured by the Consumer Price Index (CPI), is expected to rise to 4.5 percent year-on-year in the fourth quarter. 'It'll hopefully be downhill from there,' Workman stated.
BNZ chief economist Mike Jones shares a similar outlook, noting that while the current economic environment is challenging for consumers, improvements are on the horizon. He forecasts the unemployment rate to drop to 5.5 percent and inflation to ease to 4.3 percent in the current quarter, bringing the misery index to 9.8 percent. 'A less miserable consumer backdrop beckons for next year,' Jones said, though he cautioned that unexpected shocks could delay recovery.
Simplicity chief economist Shamubeel Eaqub emphasized that the misery index reflects household financial health relative to jobs, income, and living costs. Currently, 18 percent of people report poor financial conditions. According to the Reserve Bank's forecasts, conditions will begin to improve early next year but won't turn positive until early 2028.