New Zealand Economic Forecast

New Zealand Economic Outlook

October 20, 2020

Incumbent Prime Minister Jacinda Ardern’s left-leaning Labour Party secured a landslide victory following the national elections held on 17 October, giving her the ability to either govern alone or form a coalition with the Green Party. The vote came against the backdrop of a seemingly patchy economic recovery in Q3, after GDP contracted at an unprecedented pace in Q2. Consumer confidence eased throughout Q3 from June’s post-lockdown high, but averaged much higher nonetheless relative to Q2. Meanwhile, electronic card transactions expanded on average in Q3 compared to Q2, although they were fairly volatile month-on-month. On the production side, a healthy increase in exports in July-August, coupled with improving business confidence at the tail-end of the quarter, pointed to stronger business activity. A further jump in business confidence in early October bodes well for momentum in Q4.

New Zealand Economic Growth

The economy should recover robustly next year, as the reopening of the global economy supports external demand and the domestic economy resurges on the back of rebounding household spending and investment activity. Accommodative fiscal and monetary policy stances should also help the recovery. That said, further waves of the virus and global trade disputes pose risks ahead. FocusEconomics panelists project the economy to grow 4.5% in 2021, which is down 0.5 percentage points from last month’s estimate, and 3.0% in 2022.

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New Zealand Facts

Value Change Date
Bond Yield1.671.20 %Dec 30
Exchange Rate0.67-1.69 %Jan 01

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