David Farrar: Quite a few green shoots!

Business NZ says:

After a prolonged period of stagnation and negative per capita growth, the New Zealand economy is now expected to expand at just under 3% per annum through to 2027.

Both official and forward-looking indicators point to a steady improvement in the economic outlook as we enter 2026. Key indicators of growth include:

 Business confidence remains relatively high, as reflected in multiple surveys.

 Massey University’s GDP live indicates solid GDP improvement, while heavy traffic flows— a reliable real-time growth indicator—are generally rising.

 BNZ – BusinessNZ Performance of Manufacturing Index (PMI) shows increased 
activity. The October PMI marks four consecutive months above the breakeven 50 mark, a milestone achieved twice in the past three years.

 Underlying inflation is returning to target, despite headline rates remaining near the top of the Reserve Bank’s range.

 Interest rate reductions are easing pressure on struggling households and businesses.

 Credit activity is increasing. Centrix data show new household lending rose 13.2% year-on-year and mortgage enquiries remain elevated. Business credit continues to climb, up 3% year-on-year. However, company liquidations remain elevated, with October marking the highest monthly number of liquidations since 2011.

 Retail activity is starting to increase in real (inflation and seasonally-adjusted) terms.

 NZ dollar movements will boost returns for exporters converting foreign revenue back into NZ dollars, though this may increase tradeables inflation.

 Agricultural commodity prices remain solid despite some softening in dairy prices as a result of higher production, both domestically and internationally. Dairy prices have softened, with Fonterra revising its forecast Farmgate Milk Price for 2025/26 from $9.00–$11.00/kgMS to $9.00–$10.00/kgMS, lowering the mid-point from $10.00 to $9.50/kgMS.

 Fonterra’s sale of its global consumer and related businesses to French dairy giant Lactalis for NZ$4.22 billion—subject to regulatory approval—will provide a significant boost to the regional economy, expected to be completed in the first half of 2026.

 US trade developments are positive, with President Trump’s tariff rollback on beef and other products benefiting NZ, though this is no substitute for a stable, rules-based international trading system.

 Tourism is recovering, with inbound numbers increasing, while domestic tourism remains subdued.

 Infrastructure pipeline projects identified by the NZ Infrastructure Commission present long-term growth opportunities, though some will require sustained funding.

 Regulatory support from the Government to reduce barriers to business growth continues, helping lower costs for developers and supporting medium-term developments.

That does give good cause for optimism. That’s a lot of green shoots.

Advanced economies are expected to grow around 1.5% in 2025–26, with the US slowing to 2%

So anything over 2% would be very good for a developed country.

David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders