After a year of economic turbulence, New Zealand is looking ahead to a brighter 2026, according to ASB's latest economic forecast. The forecast paints a picture of recovery, driven by several key factors.
ASB's chief economist, Nick Tuffley, highlights a positive outlook for 2026, citing lower interest rates, robust exports, and a surge in consumer confidence as the main drivers. He notes, "We're seeing clear signs that the recovery is gathering pace."
Consumer spending is on the rise, particularly on big-ticket items such as cars and electronics. Rural incomes remain strong, despite global uncertainties. And this is the part most people miss: lower interest rates are set to benefit many New Zealanders as they refinance their mortgages at more favorable rates.
The export sector has proven resilient, navigating global trade challenges and tariffs effectively. A significant portion of New Zealand's exports to the US are now exempt from a 15% tariff, and there's strong growth in markets like China and Europe. Tourism is also rebounding, with visitor numbers reaching 88% of pre-COVID levels.
The housing market is expected to gain momentum in 2026, with first-home buyers in a strong position due to lower interest rates and increased housing choices. Modest price growth of approximately 3–4% is anticipated as confidence returns and employment growth boosts household earnings.
Inflation, which rebounded to 3% in the third quarter of 2025, is projected to ease further as wage growth slows and spare capacity helps keep price pressures in check. The Reserve Bank's recent cuts to the Official Cash Rate are expected to remain in place, with potential for further easing if the recovery faces setbacks.
ASB forecasts annual growth exceeding 2.5% in 2026.
Tuffley concludes that "The chapter of 'bad news' is closing, and Kiwis can look forward to a year of renewed momentum." He suggests it's time to embrace a smoother economic journey after the challenges of the past year.
But here's where it gets controversial: While the forecast is optimistic, some economists may argue that the recovery's pace could be slower or that external factors could significantly impact these projections. What do you think? Do you agree with ASB's assessment, or do you have a different perspective on New Zealand's economic future? Share your thoughts in the comments below!
