Eckhold warned of a \u201creally large hit to confidence in the next few months, both for businesses and consumers\u201d.<\/p>\n
\u201cThat does pose quite a lot of risk for growth in the second quarter of the year, and probably some flow-through to the later part of this year,\u201d he said.<\/p>\n
Westpac revised full-year growth down to 1.9% but does not expect a recession, picking 0.5% growth for the third quarter.<\/p>\n
Prior to the war, it had been among the more upbeat forecasters, with expectations of 3.3% growth for the year.<\/p>\n
The labour market would now remain weak through the middle of the year, with unemployment peaking at 5.6% and ending 2026 at 5.4%, Eckhold said.<\/p>\n
\u201cThis will crimp the recovery in household spending and the housing market.\u201d<\/p>\n
House prices are now expected to fall by around 0.9% over 2026.<\/p>\n
Sharply weaker confidence, employment and GDP growth would drive that weakness.<\/p>\n
Westpac now expects that inflation will peak at 4.1% in mid-2026, and that it will remain above 3% through the first quarter of 2027.<\/p>\n
The Treasury had previously forecast inflation at 3.7% as a worst-case scenario.<\/p>\n
Eckhold has also been watching oil supply lines closely and warned of \u201ca very short horizon\u201d before we enter unknown territory.<\/p>\n
There was no reason not to believe the Government\u2019s fuel stock updates, he said.<\/p>\n
\u201cBut what they do show is that we have a relatively short horizon over which we can see what will happen next.\u201d<\/p>\n
The Government\u2019s latest fuel update this afternoon showed that as of midnight on Sunday, New Zealand had 48.7 days\u2019 cover of petrol, down from 49.9 days last Wednesday.<\/p>\n
We had 46.5 days\u2019 cover of diesel, up from 45.5 last Wednesday and 43.4 days\u2019 jet fuel, down from 44.7 days last Wednesday.<\/p>\n
The figures include stocks both in New Zealand and on the water and destined for ports here.<\/p>\n
The data did not include shipments more than two weeks away, but fuel companies had indicated that there were \u201ca healthy number of ships on water or planned for later in April\u201d, MBIE said.<\/p>\n
The total stock estimates were contingent on boats arriving this week, Eckhold said.<\/p>\n
Westpac chief economist Kelly Eckhold.<\/p>\n
\u201cThe estimated arrival of ships is to March 25, which is today. For the next week, until April 1, you can see there\u2019s much less in the forecast.<\/p>\n
\u201cAfter that, if you look at the port websites, which is where this information is available, there\u2019s no visibility after that. That\u2019s only a couple of weeks away.\u201d<\/p>\n
Efforts to mitigate the closure of the Strait of Hormuz are underway, but the options are limited in the short term, Eckhold said.<\/p>\n
There had been an increase in shipments coming through the Red Sea.<\/p>\n
\u201cIt\u2019s not sufficient to replace what\u2019s been lost through the Persian Gulf.<\/p>\n
\u201cThere were reports that suggested that perhaps a third to a half of the lost capacity had been replaced.<\/p>\n
\u201cBut in general, those pipelines have limited capacity, and they probably can\u2019t run at those levels on an ongoing basis,\u201d Eckhold said.<\/p>\n
\u201cSo the most authoritative estimates I\u2019ve seen suggest that perhaps only in the region of a quarter of the normal daily throughput through the Persian Gulf can be replaced.<\/p>\n
\u201cObviously, the longer you go, the more different structural changes happen in the fuel market. But that\u2019s years away.\u201d<\/p>\n
The Asian refiners that supply New Zealand were also attempting to source additional supplies from the US and Canada.<\/p>\n
\u201cI assume they\u2019ll have some success at that, but of course that just increases prices.\u201d<\/p>\n
Whatever happened with regard to the conflict, the supply chain disruption would linger for several months.<\/p>\n
Refiners already had a big gap in their feedstock.<\/p>\n
Kuwait has said it would be another four or five months before it resumes normal production, because of damage to facilities.<\/p>\n
\u201cSo regardless of whether we get some sort of resolution soon, there\u2019s going to be flow-on effects through the refined products market,\u201d Eckhold said.<\/p>\n
Ultimately, though, unlike the Covid crisis, the problems were with the short- to medium-term outlook, he said.<\/p>\n
\u201cThe problem is a three-month problem, not a three-year problem,\u201d he said. \u201cBut the three-month problem is very hard to solve.\u201d<\/p>\n
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined theHeraldin 2003.<\/p>\n