Can New Zealand’s fragile recovery withstand the global oil shock?

Just as New Zealand’s fragile economic recovery shows flickers of improvement — with economists predicting its annual growth could surpass that of its larger neighbour Australia — it is facing a new threat: the war in the Middle East. New Zealand is particularly exposed to the energy shocks produced by the conflict — and to economic crises generally — with the small, isolated nation highly dependent on global trade and tourism.

“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. On Thursday, New Zealand will release its latest economic figures, assessing growth before the impact of the conflict.

Westpac forecasts GDP grew 1.6% over the course of 2025 and projects growth will accelerate to 2.8% this year, ahead of the 2.5% forecast for Australia. The IMF also estimates GDP growth in New Zealand is set to overtake that of Australia in 2026.

New Zealand

new zealand, oil shock, middle east, global trade, tourism, gdp growth, westpac, imf, nicola willis, australia