Brighter economic outlook despite rising unemployment and election uncertainty
Infometrics says economic activity might not have been as badly hit by the conflict in the Middle East as first feared.
New Zealand's economic outlook appears brighter than previously feared, despite the challenges posed by the Middle East conflict, rising unemployment, and uncertainty ahead of the upcoming general election. According to provisional estimates from the Infometrics June 2026 Quarterly Economic Monitor, the country's economic activity grew by 2.6 percent in the June 2026 quarter, representing a 1.7 percent increase over the previous year.
All 16 regional economies expanded during the June 2026 quarter, with the majority experiencing growth rates exceeding 2 percent annually.
Southland, Otago, Canterbury, and Nelson-Tasman led the growth, with strong performance in Waikato and the Bay of Plenty on the North Island. Employment growth, while lagging behind other economic indicators, rose by 0.4 percent in the June 2026 quarter, including a 0.3 percent increase in Auckland. However, six regions witnessed a decline in jobs, attributed to higher unemployment and a shortage of job advertisements.
The more optimistic economic outlook can be attributed to a weaker economy last year and a comparatively lesser impact from the Iran War. A robust primary sector and growth in most industries this quarter contributed to the positive trend. Nonetheless, concerns remain about the pace of recovery throughout 2026 amid ongoing global uncertainty.
Household spending, according to Marketview data, grew by just 0.6 percent over the past year, adjusted for retail inflation. Higher fuel prices reduced the real level of spending activity.
Tourism activity has been expanding, with a 3.6 percent rise in commercial guest nights over the June 2026 year, driven by a 9.1 percent increase in international guest nights. International tourism continues to recover, while domestic guest nights grew by a modest 0.6 percent due to higher fuel prices discouraging Kiwi holidays.
Residential construction intentions also showed improvement, with a 19 percent lift to more than 40,000 building consents over the past year, primarily driven by increases in provincial areas and metro regions. However, rural areas experienced a decline in building consents, in line with shifting population trends.
Written by urgent.news from RNZ Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
