2025-12-14 23:12:00
New Zealand’s near-term growth outlook has been downgraded in the latest NZIER Consensus Forecasts, reinforcing a softer trajectory for the NZD as yield support erodes.
GDP growth for the year to March 2026 is now seen at just 0.9%, reflecting a weaker starting point following a June-quarter contraction and continued soft demand signals from business surveys. While growth is expected to recover into 2027, the NZD trade-weighted index has been revised lower across the forecast horizon, weighed down by aggressive OCR cuts and subdued economic momentum.
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GDP growth downgraded to 0.9% for year to March 2026
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Weak starting point after June-quarter contraction
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Recovery expected beyond 2026 as rate cuts flow through
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NZD TWI revised lower across forecast period (The NZD TWI is expected to track between 67.9 and 70.5 across the forecast period.)
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NZD yield appeal weakened by OCR easing cycle
Particularly interesting points made in the report:
- Over 70 percent of mortgages in New Zealand are due for repricing within the next 12 months, meaning that many households will roll on to lower mortgage repayments at repricing. This is expected to support a continued recovery in household spending.
and:
- it is expected that the excess capacity in the New Zealand economy
will drive a continued easing in domestic inflation pressures and bring inflation to around the 2
percent RBNZ inflation target mid-point over the coming year.
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The downgrade reinforces a bearish near-term NZD narrative, with limited yield support and slow growth likely to keep the currency under pressure despite improving medium-term fundamentals.
