South Island Drives NZ Economic Recovery Amid Ongoing Inflation Concerns

New Zealand's economic recovery is gaining momentum, driven largely by the South Island, according to BusinessNZ's latest Planning Forecast. The forecast shows that unemployment remains relatively low across the region, thanks to strong growth in agriculture and tourism.

The forecast predicts annual growth of around 3% by 2028, with international commodity prices driving growth in regional New Zealand. Strong export prices are also expected, particularly for dairy, red meat, kiwifruit, and apples.

Agricultural exports are predicted to reach a record $64.3 billion in the year to June 2026, up 6% from last year. Farm-level profit is forecast to rise by 96%, with higher revenue outstripping increased costs for fertiliser, fuel, freight, machinery, and finance.

However, inflation remains a concern, running at 4.1% due largely to higher fuel costs. The Reserve Bank has lifted the Official Cash Rate from 2.5% to 2.75%, with further rises expected.