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<\/p>\nIt’s been a year of grim economic news \u2013 unemployment has been up, GDP down and consumer confidence weak.<\/p>\n
But nothing lasts forever and economists say there are a number of reasons to feel positive about the economic outlook right now.<\/p>\n
1. The official cash rate has dropped <\/p>\n
Kiwibank chief economist Jarrod Kerr said the fact that the official cash rate had fallen to the level where it was stimulatory for the economy would be a gamechanger.<\/p>\n
“People often say to me ‘there’s been 250 basis points of cuts, it’s not working’\u2026 it’s like yeah because it only took it back to a neutral setting at 3%. [At 2.5%], now we’ve actually gone into stimulatory territory.<\/p>\n
“If the theory holds, which it will, interest rates will get to a level that actually entices people again, namely investors and developers and businesses, and households with debt will feel a lot better today than they did six months ago.”<\/p>\n
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Kiwibank chief economist Jarrod Kerr. (Source: 1News)<\/p>\n
Infometrics chief forecaster Gareth Kiernan agreed interest rates would be a big factor. “People can have a degree of certainty that they will remain that way throughout 2026, which should generate more confidence among households about spending.”<\/p>\n
ANZ senior economist Miles Workman said the Reserve Bank had also indicated it would backstop the recovery. “They’re working out what level of interest rate that’s going to take but they are going to get that right eventually. <\/p>\n
“I think we should have confidence there is a recovery occurring.”<\/p>\n
Mike Jones, BNZ chief economist, said the Reserve Bank’s apparent willingness to keep cutting, if needed, would help.<\/p>\n
2. Job ad numbers have increased<\/p>\n
After a very significant fall, the number of advertised jobs increased across both July and August for the first time in more than three years.<\/p>\n
“Job numbers have managed three positive months for the first time since mid-2023,” Kiernan said.<\/p>\n
“Noting that two of those job number increases were 0.02% and 0.03%, so are barely positive and could easily be revised negative; nevertheless, it’s the best sign of any emerging turnaround in the labour market we’ve had so far.”<\/p>\n
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Infometrics chief forecaster Gareth Kiernan (Source: rnz.co.nz)<\/p>\n
3. Commodity prices are strong<\/p>\n
Dairy, meat and horticulture prices are still at strong levels.<\/p>\n
“Primary sector export returns have been stellar over the past year. While not every sector has enjoyed strong gains, the sector heavy weights have driven overall agricultural exports to $53.0 billion in the year to August 2025, some $7.5b higher than a year earlier,” Jones said.<\/p>\n
“That’s facilitated a range of options including paying down debt and rebuilding buffers. More recently we’ve seen perhaps the first signs of some movement toward spending and investing.”<\/p>\n
Kerr said US President Donald Trump’s tariffs had not hurt. “There’s no doubt there was a period of extreme volatility in markets and that might have frightened a few business owners\u2026 they simply just turned out to be a whimper\u2026 he surprised us by coming out with these massive numbers but he’s negotiated all the way down to 10% to 15% anyway… it’s not a big deal.<\/p>\n
“The exporters I’ve spoken to who export into the United States, they’re not worried at all. The Kiwi dollar’s declined so that’s taking some of the pain.<\/p>\n
“We export meat, Americans love meat. I can’t see them giving that up. They like our wine. We’re exporting the right goods which Americans will probably happily pay 15% on.”<\/p>\n
He said there would be more pass-through from farmers to the broader economy next year.<\/p>\n
Workman agreed the rural economy was very strong. “A lot of the moderation that we’ve seen in dairy prices is partly driven at least by the fact that New Zealand supply is on the rise. So that’s not necessarily going to be a bad news story for overall rural incomes if the volumes are lifting to offset any minor falls in prices.”<\/p>\n
Thanks to those higher commodity prices and a New Zealanders spending less money on international imports, the country’s terms of trade (a measure of imports versus exports) has improved significantly.<\/p>\n
“That’s narrowed a lot,” Workman said. “The upshot is New Zealand’s a lot less vulnerable to global credit pulling the plug on us. So it’s a lot more sustainable from a creditworthiness perspective and that has positive implications for our sovereign credit rating, risk premiums on interest rates when we borrow offshore, that kind of thing.”<\/p>\n
4. Spending is up a bit<\/p>\n
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