New Zealand’s economy is showing clear signs of recovery after a turbulent year marked by recession, according to ASB’s latest economic forecast.
ASB chief economist Nick Tuffley said the outlook for 2026 was looking positive, driven by lower interest rates, resilient exports, and renewed consumer confidence.
“We’re seeing clear signs that the recovery is gathering pace,” he said.
“Consumer spending is up, especially on big-ticket items like cars and electronics, and rural incomes are holding strong despite global uncertainty. With interest rates at their lowest in years, more New Zealanders are set to benefit as mortgages refix at better rates.”
New Zealand’s export sector had remained robust despite ongoing global trade challenges and tariffs, he said.
“Around a quarter of our US-bound exports are now exempt from the added 15% tariff, and we’re seeing strong growth in markets like China and Europe. Tourism is also rebounding, with visitor numbers back to 88% of pre-Covid levels.”
Tuffley said the housing market was expected to regain momentum in 2026, with first-home buyers in a strong position thanks to lower interest rates and more choice.
“We anticipate modest price growth of around 3–4%, as confidence returns and employment growth lifts household earnings.”
Inflation, which rebounded to 3% in the third quarter of 2025, was forecast to ease further as wage growth slows and spare capacity keeps price pressures in check, he added.
“The Reserve Bank’s recent cuts to the Official Cash Rate are expected to hold, with the risk of further easing if recovery falters.”
ASB forecasts annual growth of more than 2.5% in 2026.
“The chapter of ‘bad news’ is closing, and Kiwi can look forward to a year of renewed momentum,” Tuffley said.
“It’s time to enjoy a smoother ride after the potholes of the past year.”
