NZ Economy Showing Early Signs of Recovery

Source: Dukascopy Bank SA
The OCR has been reduced to 2.25%, and the economy is being supported by low interest rates and strong export prices, especially for meat, fruit, and dairy. These sectors are performing well, while industries focused on domestic consumers, such as retail and construction, are struggling. Lower interest rates are encouraging more household spending and business investment, and home construction is beginning to pick up.


The labour market remains weak, with unemployment at 5.3%, but conditions are stabilizing. Job ads have begun to rise, and unemployment is expected to fall next year as the recovery broadens. Inflation is at the top of the 1–3% target range. Tradables inflation is elevated due to higher food prices, petrol, and imported services. However, food price inflation is expected to ease. Non-tradables inflation continues to decline despite increases in council rates and electricity. Rents, insurance, and building costs are rising more slowly. Inflation is forecast to fall back to around 2% next year.>

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