Stagnant Economy and Rising Unemployment Forecasted Ahead of New Zealand Election

New Zealand's economy is facing a period of long-term stagnation, according to economist Brian Easton. The country's unemployment rate has been creeping up over the last few years and recently reached its highest level since March 2015 at 5.6% in the June 2026 quarter.

At the time of the last general election in 2023, the unemployment rate was 4.0%. Easton expects that by the time the next general election comes around in November 2026, unemployment will be higher and inflation lower compared to the previous election.

The labour force participation rate is a more useful indicator of the state of the labour market than the unemployment rate alone, as it takes into account people who are underemployed or have given up seeking employment. The Māori unemployment rate was 10.8% in the June quarter, compared to 4.2% for Pākehā.

Easton notes that the economy has been creating jobs, but at a slower pace than expected. He attributes this stagnation to 'secular stagnation', which he does not blame on one party or the other. However, politicians and their advisers have failed to think through the implications of this trend.