Westpac lists the economic indicators to watch in 2025
Kelly Eckhold (pictured above) highlighted New Zealand’s calm start to 2025, with key economic data soon to guide the RBNZ’s monetary policy decisions.
As regular economic activities resume, the recently released NZIER Quarterly Survey of Business Opinion (QSBO) and upcoming data releases are set to provide insights into the economic trajectory after a challenging mid-2024.
Economic indicators to watch
The QSBO, released yesterday, indicated a cautious improvement in New Zealand’s economic outlook at the end of 2024. Although business confidence has risen, weak demand persists, with firms hesitant to invest or hire until more concrete signs of sustained recovery appear.
Despite optimistic signs from recent surveys such as the ANZBO business confidence survey, it remains uncertain whether this upbeat sentiment will fully translate into a broader economic recovery, Eckhold said.
Inflation and RBNZ’s monetary policy
A crucial aspect to monitor will be the inflation indicators, which previously showed more subdued pressures compared to other forecasts, Westpac said.
A placid inflation outlook could bolster the dovish stance within the Reserve Bank’s monetary policy committee, potentially influencing further adjustments to the OCR.
Key economic data releases
Beyond the QSBO, other important data such as building consents, labour market statistics, and potentially REINZ house prices will play a significant role in shaping economic perspectives.
These figures will likely guide RBNZ’s monetary policy direction as it continues its path of policy easing, hinted at by the anticipated 50-basis-point OCR cut in February.
RBNZ’s strategic challenges in 2025
Looking ahead, 2025 is set to be a defining year for RBNZ’s monetary policy, with critical decisions on the horizon regarding interest rates and economic stimulation measures, Eckhold said.
The bank’s response to the significant monetary policy easing of the past six months and its impact on New Zealand’s economy will be pivotal.
The potential over-easing concerns could lead to an adjustment phase in 2026, signaling a cautious approach to long-term economic stability.
Global economic factors and local fiscal policies
Internationally, the global economic climate and policy decisions from major economies like the US will influence New Zealand’s export markets and economic performance, according to the Westpac report.
Domestically, the government's fiscal stance will also be crucial, especially in terms of infrastructure spending and managing fiscal deficits, which will directly impact economic growth and recovery prospects.
Access the full Westpac report here.
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