New Zealand Economy Shrinks Sharply, Sparks Rate Cut Bets
Source: New Zealand economy contracts sharply, fuelling bets of steeper rate cuts (2025-09-18)
New Zealand's economy contracted sharply in the second quarter, with GDP shrinking by 0.7%, the largest decline since 2021. The decline was driven by weaker consumer spending, declining exports, and a slowdown in construction activity, raising concerns about the country's economic resilience amid global uncertainties. The data has intensified market expectations that the Reserve Bank of New Zealand may cut interest rates sooner than previously anticipated, possibly as early as late 2023 or early 2024. Policymakers are now balancing inflation control with supporting economic growth, with analysts predicting a potential easing of monetary policy to bolster the economy amid ongoing challenges.