Isolated and exposed: can New Zealand's fragile economic recovery withstand the global oil shock?

"We would far prefer this wasn't happening to the New Zealand economy, and it's not good for the New Zealand economy, finance minister Nicola Willis said this week. The economy and cost of living will be the central issues in elections, set to take place in November, and while confidence had been building and New Zealand is showing signs its economy is finally drawing a line under its worst stretch in almost two decades, the war creates new uncertainty."

"We've been through an economic trough that's been just as deep and prolonged as that which followed the global financial crisis, said Benje Patterson, an independent economist. New Zealand's economy has been battered by recession and stagnation that arrived in the wake of the Covid-19 pandemic. The country struggled to find its feet as inflation piled pressure on businesses and drove households to rein in spending."

"It's been a tough couple of years, like, really tough. We've had significant reduction in the economy, job losses, business closures, all that kind of stuff, says Shamubeel Eaqub, an economist. But [there are] signs that things are kind of bottoming out and beginning to improve."

New Zealand's economy is emerging from its worst period in two decades, with growth expected to surpass Australia's. However, the Middle East conflict threatens this recovery through energy shocks and supply chain disruptions. The small, trade-dependent nation is particularly vulnerable to global economic crises. After severe recession and stagnation following the Covid-19 pandemic, inflation pressures, job losses, and business closures have plagued the economy. Recent indicators suggest improvement, with GDP growth projected at 1.6% in 2025 and acceleration to 2.8% thereafter. The conflict creates new uncertainty ahead of November elections, where economy and cost of living remain central issues.

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