New Zealand's economy is likely to grow to over 2.5% per year in 2026, as the impact of low interest rates will slowly start to increase the consumers' willingness to spend, according to an economic forecast update by ASB Bank.
The bank sees a "reasonable" rebound in growth in the second half of 2025, as lower interest rates lift spending on electronic goods and cars, and construction activity picks up, the update said.
It also sees exports strengthening, noting the country is coping "fairly well" with this year's US tariffs.
The housing market is set for a modest recovery in 2026, due to fresh listings and re-fixing of mortgages at lower interest rates, the update added.
ASB believes that a "high degree" of spare capacity in the economy will continue to restrain price increases.
It also expects the Reserve Bank of New Zealand to further ease interest rates in 2026.
