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There is light at the end of the tunnel for New Zealand’s economy in 2025 – but it might be brighter for some.
The big question for the year ahead is not if the economy will recover, but rather, how fast.
With interest rates slowly coming down, it’s reasonable to expect 2025 will be a better year than 2024. But it’s worth bearing in mind there are still some sticky elements to the inflation picture.
In my view, there's nothing set in stone about the Reserve Bank of New Zealand's easing path, and the central bank will continue to feel its way from here, watching the data very closely.
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We're in a part of the business cycle where there are clear green shoots, but there are also withering plants from the damage done over the past year or two.
Cash is king, and one firm's challenges may very well be another firm's opportunities. Businesses with low debt and robust balance sheets may find 2025 is a good time to grow.
The challenge is the economic recovery won't be instant.
ANZ Research expects there will be further rate cuts in NZ during the first half of 2025, which will sow the seeds of recovery for the rest of the year.
Sharon Zollner is Chief Economist, New Zealand, ANZ
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