New Zealand’s economy is showing encouraging signs of recovery and growth after navigating a challenging period. Recent data reveals moderate GDP growth, easing inflation, and cautious monetary policy easing — all pointing to a stabilizing and resilient economy in the region.
Stronger Growth and Controlled Inflation
Following a recession, New Zealand’s GDP rebounded with a 0.7% increase in late 2024 and continued growth into early 2025. Inflation has settled comfortably within the Reserve Bank’s target range of 1–3%, allowing for a gradual reduction in interest rates to stimulate further growth. With forecasts predicting GDP growth between 1.4% and 3% over the next two years, New Zealand is poised for a steady economic upturn.
Labour Market and Demographic Challenges
While the unemployment rate has inched up slightly to 5.2%, reflecting some softness in the labour market, the government’s strategic shift toward attracting high-skilled migrants aims to fill critical workforce gaps. Emigration trends remain a concern, but policy reforms are underway to balance labour supply and demand.
What This Means for Australia
New Zealand’s economic rebound carries significant implications for Australia, given the close economic, social, and trade ties between the two countries.
- Trade and Investment Boost: A growing New Zealand economy supports increased demand for Australian exports, especially in sectors like agriculture, technology, and services. Australian businesses stand to benefit from renewed opportunities in this stable and expanding market.
- Labour Mobility and Skills Exchange: As New Zealand tightens low-skilled migration and focuses on attracting skilled workers, Australia may see shifts in labour migration flows. This dynamic presents opportunities for Australian employers to tap into a broader pool of talent while strengthening bilateral cooperation on workforce development.
- Tourism Synergies: New Zealand’s upcoming reforms to charge foreign tourists visiting iconic natural sites may slightly shift travel patterns in the region. Australia’s tourism industry could see increased interest from travelers seeking alternative destinations, boosting its own visitor economy.
- Regional Stability: A recovering New Zealand contributes to overall economic stability in the Pacific region, enhancing shared prosperity and collaborative initiatives that benefit both nations.
Looking Ahead
As New Zealand navigates its path to sustained economic growth, Australia is well-positioned to capitalize on emerging opportunities through trade, labour mobility, and regional partnerships. Both countries stand to gain from coordinated policies and mutual support in an interconnected economy.
This positive outlook reinforces the strength of the Australia-New Zealand relationship and highlights the importance of continued collaboration for long-term prosperity.