New Zealand Economic Snapshot
Economic Forecast Summary (June 2022)
After reaching 5% in 2021, real GDP growth will ease to 3% in 2022 and 2% in 2023. High inflation and rising interest rates will weigh on private consumption. Economic growth will slow but remain solid as pent-up demand during the surge in COVID-19 infections in early 2022 is unleashed and gradual reopening of the border allows the tourism sector to recover. Inflation will decline in 2023 but remain high, as firms pass on global commodity price inflation and workers demand higher wages.
Economic Survey of New Zealand (January 2022)
The New Zealand economy recovered quickly from the COVID-19 shock thanks to effective virus containment, measures to protect jobs and incomes and highly expansionary macroeconomic policies but is now overheating and house prices have soared. The Reserve Bank has begun to tighten monetary and macroprudential policies with a view to achieving its price and financial stability objectives. Together with policy measures to increase housing supply, this should help moderate housing price inflation. While the fiscal deficit has begun to fall from the highs reached during the first wave of the COVID-19 shock, additional consolidation measures will be needed to put public finances on a sustainable path, including an increase in the pension eligibility age.
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Reform Priorities (April 2021)
Going for Growth 2021 - New Zealand
The economy recovered strongly, supported by large policy stimulus and an effective response to COVID-19, but some sectors hardest hit by border restrictions, notably tourism, lag behind. The pandemic highlighted a number of structural challenges. A key priority is to address the deteriorating access to affordable housing, which weakens financial resilience, hampers labour mobility and reduces inclusiveness.
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2021 Structural Reform Priorities
- Housing: Increase supply and quality of affordable housing
- Innovation: Promote innovation in tandem with export and foreign direct investment
- Labour market: Introduce a short-time work scheme and enhance support for unemployed jobseekers
- Education: Improve outcomes for students from vulnerable socio-economic backgrounds
- Child poverty: Monitor the impact of the COVID-19 crisis on income and material hardship and step up support if needed