NZ Economy Finally Shows Signs of Life After Double-Dip Recession
New Zealand's economy has been on a rollercoaster ride since the COVID-19 pandemic. In 2020, the Reserve Bank reduced the Official Cash Rate to a record-low of 0.25 percent and pumped over $50 billion into the economy through quantitative easing. This, combined with Labour's $70 billion in Covid-related expenditure, fueled a housing boom and pushed inflation to 7.3 percent in 2022.
Instead of raising interest rates to control inflation, the Reserve Bank waited six months before finally acting aggressively by increasing the OCR to 5.5 percent. This move deliberately engineered a recession, forecasting unemployment to rise to 5.7 percent.
The recession had a devastating impact on unemployment, which surged from its historic low of 3.2 percent to 5.4 percent by December 2025. However, with the Middle East crisis subsiding and net migration remaining low, there are now signs that an economic recovery is underway.