Recovery Signs Emerge Amid Geopolitical Volatility

The global economy is showing signs of recovery amidst ongoing geopolitical tensions and oil price volatility.

The Middle East ceasefire proved short-lived, affecting tanker crossings through the Strait of Hormuz and sending energy prices higher. However, sharp falls in refined fuel costs over the past week may provide a short-term cap on retail fuel prices.

Global growth forecasts have reverted to a trend-like 2.6% expansion for the coming 12 months, driven by the AI capex boom in North Asian manufacturing and exports.

New Zealand's economy is also showing signs of life, with momentum expected to build from the current quarter, leading to growth of 1.6%y/y forecast for this calendar year and 2.2% for 2027.