Ratings agency sees GDP growth accelerating through 2027, tempered by external threats
Ratings agency Moody's has declared that New Zealand's economic recovery is now under way, pointing to a combination of strong agricultural export prices, a rebound in tourism and the delayed impact of earlier interest rate cuts, RNZ reported.
In a new report on the country's credit conditions, the agency said New Zealand's institutional strength and well-capitalised banking system would support the economy as it gradually pulls out of a prolonged soft patch.
"New Zealand's economy is emerging from two years of stagnation with support from strong agricultural export prices, recovering tourism and the lagged effects of earlier monetary easing," Moody's said.
The agency forecast real GDP growth of 1.6% for 2026, with room to run higher if business confidence and investment intentions translate into stronger spending over the remainder of the year. Growth is expected to broaden further to 2.3% in 2027, underpinned by resilient external demand and firms lifting investment.
That optimism holds up locally too: ANZ's August Business Outlook found confidence still high despite fresh oil-price pressure, with Westpac's Michael Gordon noting firms "appear to have weathered the disruptions stemming from the Iran conflict reasonably well."
Global headwinds remain the key risk
Despite the improving outlook, Moody's cautioned that New Zealand's fortunes remain closely tethered to international conditions. Higher oil prices earlier in the year pushed up consumer prices and squeezed household budgets, delaying rather than derailing the recovery.
The agency warned that ongoing threats could still knock momentum off course: "The recovery is vulnerable to geopolitical tensions, global trade risks, El Niño conditions, and election-related uncertainty."
Moody's noted that, as "a small, open economy, New Zealand's performance remains closely tied to global conditions," meaning shocks abroad could flow through quickly to local growth.
Agricultural exports were singled out as a continuing pillar of strength, with dairy, meat and kiwifruit prices tipped to hold near historically high levels amid favourable global supply and demand.
Uneven gains across the economy
Not every part of the economy stands to benefit equally, Moody's said, with cost-of-living pressures, fiscal constraints, and rising infrastructure demands likely to produce different outcomes across sectors.
The agency also pointed to growing investment in data centres as an emerging driver of activity beyond New Zealand's traditional export base, a trend it said could benefit infrastructure operators as electricity demand climbs.
Zooming in on that same tightening cycle, after the RBNZ's quarter-point hike to 2.75% from 2.50% on 2 September, major bank forecasts for where the cycle ultimately peaks now range from 3% to 3.75%.
For brokers, Moody's outlook offers a rare bright spot to balance against the RBNZ's tightening cycle when advising clients this year.
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