Weekly Economic Commentary

The New Zealand economy faces a sharp energy price shock from the Iran conflict, leading to lower growth forecasts (1.5% for 2026) and higher expected inflation. Consequently, Westpac expects the RBNZ to begin hiking the OCR from September.

Key Takeaways

• 1.The Iran conflict has delivered a sharp energy price shock, lifting inflation and disrupting NZ's economic momentum.
• 2.NZ GDP growth expectations for 2026 have been downgraded to 1.5% as higher living costs erode household income.
• 3.The RBNZ is expected to pivot toward interest rate hikes, likely starting in September, to combat persistent inflation.

Table of Contents

• Under the pump
• Key views
• Key data and event outlook
• Chart of the week.
• Fixed versus floating for mortgages.
• Global wrap
• Financial markets wrap
• The week ahead
• Economic and financial forecasts
• Data calendar

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