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ECONOMY

ASB Quarterly Economic Forecast: A Brighter 2026 in Sight

ASB

Monday 8 December 2025, 5:01AM

By ASB

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  • Economy in recovery mode after last year's recession.
  • Kiwi are spending more, and exports are holding strong.
  • Lower interest rates mean better times ahead for households and first‑home buyers.

After a bumpy ride through last year's recession New Zealand's economy is finally turning a corner, according to ASB's latest Economic Forecast.

ASB Chief Economist Nick Tuffley says with green shoots of growth emerging, Kiwi can look forward to a brighter 2026, fuelled by lower interest rates, resilient exports, and a renewed willingness to spend.

"We're seeing clear signs that the recovery is gathering pace. Consumer spending is up, especially on big-ticket items like cars and electronics, and rural incomes are holding strong despite global uncertainty. With interest rates at their lowest in years, more New Zealanders are set to benefit as mortgages refix at better rates."

Despite persistent global trade challenges and tariffs, New Zealand's exports – particularly beef and dairy – have continued to thrive, showing impressive resilience and strength.

"Around a quarter of our US‑bound exports are now exempt from the added 15% tariff, and we're seeing strong growth in markets like China and Europe," says Tuffley. Tourism is also rebounding, with visitor numbers back to 88% of pre‑Covid levels.

The housing market is expected to pick up speed in 2026, with first‑home buyers in a particularly strong position thanks to lower interest rates and plenty of choice. "We anticipate modest price growth of around 3–4%, as confidence returns and employment growth lifts household earnings," Nick notes.

"Inflation rebounded to 3% in the third quarter of 2025, but further softening is expected as wage growth slows and spare capacity in the economy keeps price pressures in check. The Reserve Bank's recent cuts to the Official Cash Rate are expected to hold, with the risk of further easing if recovery falters."

With the worst seemingly behind us, ASB forecasts annual growth of over 2.5% in 2026. "The chapter of 'bad news' is closing, and Kiwi can look forward to a year of renewed momentum," says Nick. "It's time to enjoy a smoother ride after the potholes of the past year."

The latest ASB Quarterly Economic Forecast, along with other recent ASB reports covering a range of commentary, can be accessed at the ASB Economic Insights page: https://www.asb.co.nz/documents/economic-insights.html