NZ Economy Showing Signs of Recovery Amid Ongoing Uncertainty
The global economy is showing signs of recovery, but uncertainty remains due to ongoing geopolitical tensions. The conflict in the Middle East has led to increased energy prices, which could continue to impact growth prospects.
However, forecasts suggest that global growth will remain steady at around 2.6% over the next 12 months, driven by a positive offset from the AI capex boom and North Asian manufacturing and exports.
In New Zealand, business activity expectations have largely recovered since February-April, with optimism in the manufacturing sector and a high-water mark of 59.7 in June for the Performance of Manufacturing index.
The signs of life in domestic data support the view that an underlying recovery is underway, with growth expected to build from here and reach 1.6% y/y by the end of this calendar year and 2.2% in 2027.