ANZ Economic Outlook

ANZ's Economic Outlook publications are comprehensive projections for the macro-economy and trends in New Zealand’s financial markets.

2024 editions

May 2024

Non-tradable inflation has surprised on the stickier side of expectations of late, suggesting the lags from monetary tightening are lengthier and/or tightening hasn’t quite gotten as much inflation-fighting traction as previously assumed. However, economic activity has been on balance weaker than expected and forward-looking indicators suggest things aren’t going to pick up any time soon. Indeed, key drivers of economic momentum such as housing, fiscal policy, net migration, and the terms of trade are increasingly playing ball in terms of the slowdown the RBNZ needs to see. Increasing coordination across these drivers could become particularly potent if amplified by households and businesses following through on their reported pessimism.

All up, the economy is on the right track for disinflation, but there are still unresolved questions about the speed of the train and whether the track leads all the way to 2% – or for that matter whether we’ll overshoot the station. Here and now, inflation is still way too high, and upside risks remain. That’s expected to keep the RBNZ in its watch, worry, wait stance for a while yet, standing ready to respond and recalibrate to data surprises in either direction. 

February 2024

The economy has cooled, but there’s still a long descent to 2% inflation to navigate from here. High interest rates are cooling demand and have caused GDP data to look recessionary. However, despite the weakness, capacity pressures need to weaken further in order to get inflation sustainably back to 2%. It’s more challenging than usual for the RBNZ to calibrate its policy response, given the large shocks that are still buffeting the economy and old pandemic-era shocks that are still working their way through. Let’s dig into some key drivers in a little more detail.