New Zealand’s Budget Release: Forecasts 2.3% GDP growth in 2026/27
New Zealand’s Finance Minister Nicola Willis delivered the government's Budget 2026 on Thursday with the details below.
Key quotes
NZ sees 2025/26 operating balance before gains, losses NZ$-15.06 bln (hyefu NZ$-16.93bln).
NZ sees 2026/27 OBEGAL balance NZ$-14.09 bln (hyefu NZ$-12.99bln).
NZ 2025/26 cash balance NZ$-9.31 bln (hyefu NZ$-14.80).
NZ sees 2026/27 GDP +2.3% (hyefu +3.4%).
NZ sees 2025/26 net debt 42.4% of GDP (hyefu 43.3%).
NZ Fin Min says will introduce prudential levy on banks, non-bank deposity takers, insurers and other financial market participants.
NZ Fin Min says new prudential levy to recover around NZ$209 million over next four years.
NZ govt expects to returning operating balance before gains, losses surplus in 2029/2030.
NZ treasury sees inflation peaking at 4.0% in Q2 2026.
NZ DMO plans to issue nz$34 billion worth of bonds in 2026/27, unchanged with December forecast.
NZ DMO planned gross bond issuance for four years to June 30 2030 is NZ$124 bln down from NZ$130 bln forecast in December.
Market reaction
At the time of writing, the NZD/USD pair is trading around 0.5900, up 0.02% on the day.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
