New Zealand's economic recovery has been delayed by the impact of oil price shocks and heightened global uncertainty, according to the International Monetary Fund. The IMF anticipates inflation will temporarily rise to approximately 4% by mid-2026, remaining above the Reserve Bank of New Zealand's target band until the end of that year.
The IMF's assessment, following its Article IV mission, noted that while the economy had begun to gain traction in early 2026 after a period of weak growth, disruptions in global energy markets due to the Middle East war pushed up fuel prices and reduced disposable incomes.
The fund projected New Zealand's GDP growth to be 2.0% in 2026 and 2.7% in 2027. It advised that monetary policy should gradually move towards a neutral stance by the end of 2026, while remaining adaptable to persistent inflation pressures, though acknowledging uncertainty in defining neutrality.
The IMF also commented on fiscal policy, stating the 2026 budget appropriately balanced recovery support with medium-term consolidation, and recommended rebuilding fiscal buffers as growth improves. Furthermore, the organization urged structural reforms aimed at enhancing productivity, deepening capital markets, and increasing housing supply.