Economic recovery on the horizon, Infometrics says
The New Zealand economy is poised for a turnaround in the coming years, according to the latest projections from Infometrics.
With the challenging period of post-inflation recession expected to recede, the country looks forward to a period of stabilisation and modest growth.
The economy is anticipated to grow at an average of 2.5% annually in 2025 and 2026, driven by a revival in household spending, a steady housing market, and robust export commodity prices.
Gradual improvement in economic indicators
Gareth Kiernan (pictured above), Infometrics’ chief forecaster, noted a slow but steady recovery, with GDP growth projected at 0.5% per quarter in 2025. This marks a significant improvement over the stagnant growth rates of 2023 and 2024.
“GDP growth averaging 0.5% per quarter during 2025 is not rapid, but it would be a marked improvement on the 0.0% flat quarterly average throughout 2023 and 2024,” Kiernan said.
The resurgence in household spending is expected to gain momentum, particularly in the latter half of 2025, supported by easing monetary conditions and lower mortgage payments.
Monetary policy and consumer spending
The reduction in mortgage payments has reportedly freed up approximately $8 million per week for additional household spending. With the official cash rate predicted to stabilise at 3.25% by mid-2025, disposable income for consumers is expected to increase, providing a substantial boost to private consumption.
“By mid-2025, we expect the Reserve Bank will have finished cutting in this cycle,” Kiernan said, suggesting a cautious approach to further rate cuts due to potential inflationary pressures from a weaker national currency and higher international fuel prices.
Export markets and government spending
The Infometrics forecast also highlighted significant gains in commodity prices, particularly meat, dairy, and horticulture, which are expected to enhance economic conditions in provincial areas.
However, global uncertainties, including US tariffs and challenges in the Chinese market, could pose risks to export growth.
On the domestic front, government spending is expected to remain restrained due to fiscal tightening, although there may be some increase in government investment spending in 2026 to fulfill electoral promises and boost public infrastructure, the Informetrics insights showed.
See the Infometrics article here.
