Westpac senior economist Satish Ranchhod has released new research comparing the New Zealand and Australian economies, highlighting shifting growth forecasts, labour market contrasts and trade performance.
Top 3 Takeaways
- NZ growth advantage – New Zealand’s GDP is forecast to grow faster than Australia’s in 2025–26
- Australia’s labour strength – A stronger jobs market and wage growth continue to attract New Zealanders across the Tasman
- Trade rebalancing – Both economies face challenges with external balances, but commodity exports remain a stabilising force.
Economic Growth Outlook
New Zealand’s GDP growth is expected to outpace Australia’s in the near term, with forecasts of 2.4% in 2025 and 3.1% in 2026. This rebound is driven by cuts to the Official Cash Rate (OCR) and stronger export returns. By comparison, Australia is expected to grow at 2% in 2025 and 2.2% in 2026, as public sector spending slows.
Labour Market Dynamics
While New Zealand’s economy is improving, it is starting from a weaker position. Australia continues to enjoy a tighter labour market, with lower unemployment and stronger wage growth (3% in 2026) compared to New Zealand’s forecast of 2%. This differential is contributing to ongoing migration flows from New Zealand to Australia.
Trade and External Balances
Australia recorded a 2% trade deficit of GDP in the year to March, reversing its prior surplus years. New Zealand’s current account deficit, while still higher at 6% of GDP, is easing from a peak of 9% and is forecast to fall to 4% next year. Both economies are supported by strong commodity export demand, particularly in dairy for New Zealand.
Access the full report and analysis on RNZ:
🔗 Will New Zealand or Australia be the economic winner in years to come?
2025 Edition of ‘Doing Business in New Zealand’ now available
New 2025 Edition of ‘Doing Business in New Zealand’ now available
Source: RNZ, 27 August 2025