Kerre Woodham: Can you see the light at the end of the tunnel?

The Official Cash Rate has been left unchanged, 2.25%, expected by all the commentators, but perhaps less expected was a dovish view of the future. It was the new Reserve Bank Governor's, well she's not that new I suppose, the newish Reserve Bank Governor's first OCR review, having come on board at the end of '25. She is pretty optimistic about the economy. She said it will continue to recover, but she understands that many households are not feeling it yet. Must be rather annoying being told, no, everything's fine, everything's turning around, everything's great, while you're looking down the back of the couch for coins to get the kids' school lunches.

Guest Post: The managed decline of the New Zealand economy

A guest post by Harro104 on Kiwiblog:

New Zealand likes to think of itself as a rich country that has simply lost its way for a while. The reality is more uncomfortable. We are managing our own economic decline, steadily, deliberately, and with broad political consent.Around the year 2000, New Zealand’s GDP per person was roughly 75% of the income level of the richest OECD countries. Today, it is closer to 50%. That is not a cyclical dip or a short-term policy failure. It reflects a long-running structural divergence, and nothing in our current policy settings suggests that trend is about to reverse.This is not about pessimism. It is about incentives, behaviour, and mindset.

John McLean: Axeable agencies of state

The Government and main stream media outlets have been doing their best to paint a picture of an economic upswing, just in time for Christmas. But the portrayed rosy economic future is a vision through rose tinted glasses. Inflation is at 3%, the highest it’s been since mid-2024 and unemployment, at 5.3%, is the highest since 2016.

More particularly, New Zealand’s core national debt had risen from $81 billion at the end of the third quarter of 2023 (the last quarter of the departed Labour Government’s term in office), to $170 billion at the end of Q3 2024, to $182 billion at the end of Q3 2025. The annual interest cost of NZ’s debt is about $10 billion. New Zealand’s debt will top $200 billion within the next few years (that’s $40,000 for every single man, woman and child in New Zealand). Nothing’s really changed, economically, since my Substack exactly two years ago:

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:

Dr Oliver Hartwich: NZ’s zombie rock star economy

Walk through Wellington, and you will see plenty of empty shopfronts and shuttered cafes. Switch on the radio, and you will hear experts say this is the best time to buy a house in years.

Talk to shoppers, and they will tell you about cost-of-living pressures. Listen to the Reserve Bank, and they will tell you inflation is back within its target band.

These are contradictory messages. Yet they all make sense, because the New Zealand economy in late 2025 is a complicated mix.

Damien Grant: Corporate New Zealand has written off this administration

“If no policy action is taken, the fiscal position would become increasingly unsustainable and net core Crown debt would rise to around 200% of gross domestic product (GDP) by 2065” declares the Treasury in their September Long-Term Fiscal Statement.

They soften the blow marginally with some wistful optimism, “however, the Treasury expects that governments will make adjustments to fiscal policy that will flatten the debt trajectory”.

Chris Lynch: BusinessNZ forecast points to cautious optimism for New Zealand economy

New Zealand’s economy is expected to grow by nearly 3 percent by 2027, according to the latest BusinessNZ Planning Forecast, but lingering global and domestic challenges continue to cloud the outlook.

BusinessNZ economist John Pask said the country was still feeling the effects of international instability, which could limit progress in the years ahead.

Zoran Rakovic - Shadows Over Capital: How Regulatory Uncertainty is Stalling New Zealand’s Economic Future

From Lucas to de Soto, what the world’s greatest economists can teach us about our stifled growth.

New Zealand's prosperity is being quietly strangled—not by taxes, but by regulatory uncertainty. From Lucas to de Soto, the world’s leading economists warn: without clear, stable rules, capital flees. A must-read analysis of where we’re headed and why.

Penn Raine: It’s not the economy, stupid

Clinton’s ‘90’s strategist James Carville must have resented how often his quip is ascribed to his boss, and worse, that he is ever only partially quoted. Like so many memorable pronouncements that come in threes, the rest of his 1992 successful campaign message was that the electorate cares about healthcare, and that ‘more of the same’ policies might not cut it.

Clive Bibby: The Sugarbag Years

I once read a book called the “Sugarbag Years” by Tony Simpson.

It was a collection of personal interviews of people who had experienced real poverty in this country during the Depression of the early 1930s. 

Those evidence based testimonies probably epitomised the opinions of those involved in the nationwide movement that lead to the election of the First Labour Government and the welfare reforms that followed. And subsequently, a greatful nation continued to re-elect Labour for successive terms until the public mood changed after the ill judged “Wharfies strike” in 1951.

Dan Brunskill: The Coalition Government promises an economic growth plan within weeks.....

The Coalition Government promises an economic growth plan within weeks, but can it deliver results?

It is awkward for a Government, elected to get the economy back on track, to have spent its first full year in office watching output shrink almost $2 billion in inflation adjusted prices.

2024 was a year of recession by any definition of the word, although a more useful definition would show the New Zealand economy has been in a recession since September 2022.

Capitalist: Sunshine Through the Interstices

It is all the usual left-wing echo chamber. Broke lefty media people and loser socialist politicians are trying to pimp the poor.

Living here in paradise on the Taieri Plains, south of Dunedin, with a view of the iconic Saddle Hill in the distance and safe from crime, poverty, taxation, ‘diversity’, liberals, wokeness and other rubbish, there are times I think perhaps I am ‘missing something’ that comprises day to day life for most people. Just such an occurrence has arisen that both astonished me and leaves me wondering what all the fuss is about.

Professor Robert MacCulloch: Has the bottom fallen out of the New Zealand ecomomy.....

Nobel Laureate Paul Krugman's GDP Graph Confirms the Bottom has Fallen Out of the New Zealand Economy

High profile US Economist Paul Krugman has written a New York Times article in which he shows in one graph the incredible resilience and performance of the American Economy. The dark blue line below tracks the pre-pandemic long-run trend in Real GDP. Meanwhile the orange line is actual real GDP. Krugman remarks that now, in the post-pandemic years, actual GDP is tracking significantly above its forecast pre-pandemic trend. As far as US GDP is concerned, America is fully back to business - as if the pandemic never happened:

Professor Robert MacCulloch: How to Break Monopoly power in the NZ Economy....

Finance Minister Willis Challenges DownToEarth.Kiwi to give her "ideas" about how to Break Monopoly power in the NZ Economy. Here they are.

When interviewed by Heather du Plessis-Allan on Newstalk ZB yesterday, Finance Minister Willis said, "And I'd like to put this out to Robert MacCulloch: if he has more ideas on how we can drive competition in the NZ economy, to break up some of these duopolies that are making too much money out of New Zealanders, then I am up for those ideas". I've already done so. Her National Party rejected them. Despite knowing some of her colleagues, who've asked whether she'd like to meet to me, she never did. Why not?

Michael Reddell: The Treasury and productivity

Late last week The Treasury released a new 40 page report on “The productivity slowdown: implications for the Treasury’s forecasts and projections” (productivity forecasts and projections that is, rather than any possible fiscal implications – the latter will, I guess, be articulated in the Budget documents). In short, if (as it has) productivity growth has slowed down a lot then it makes sense not to rely on optimistic assumptions about rebounds in productivity growth based on not much more than hopeful thinking. Fortunately, “wouldn’t it be nice if productivity were to grow faster” does not seem to be The Treasury’s style.