NZ Economy on Track for Recovery, but Global Risks Loom

New Zealand's economy is showing signs of recovery, according to ratings agency Moody's. The country's strong institutions and robust regulatory frameworks will support this growth, along with a well-capitalized banking system.

However, there are concerns about the impact of cost of living issues, fiscal constraints, and growing infrastructure needs on different parts of the economy. Moody's notes that these factors will create varying outcomes for different sectors.

The agency predicts 1.6% real GDP growth 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% in 2027 as external demand remains supportive and businesses step up investment. However, New Zealand's performance remains closely tied to global conditions, making it vulnerable to geopolitical tensions, global trade risks, El Niño conditions, and election-related uncertainty.