New Zealand’s economy: on the edge

ANZ Research expects a contraction in the New Zealand economy over the first half of 2023. If international tourism and education don’t pick up as quickly forecast, the whole economy could easily slip into recession.

“A strong recovery in net exports will hopefully see New Zealand avoid a recession.”

The Reserve Bank of New Zealand is dealing with the low likelihood of a sharp supply-side recovery. ANZ Research has downgraded our outlook for net migration. Given we’ve also seen very strong wage growth, the task of taming inflation hasn’t got any easier.

Here’s the story we see in charts and the challenge facing regulators:

The OCR will go as high as it needs to...

Our OCR forecast peaks at 4 per cent but 7 per cent year on year wage growth means it may need to go higher.