NZ Economic Update: Rates, Concrete, Insurance, Dairy & More – Feb 26 2026

New Zealand’s economic landscape presented a mixed picture on Wednesday, February 11, 2026, with signs of modest growth in specific regions offset by ongoing challenges in insurance affordability, a rise in reported corruption, and fluctuating market sentiment. The Reserve Bank of New Zealand (RBNZ) is also facing renewed scrutiny over its pandemic-era monetary policy.

Concrete Evidence of Regional Divergence

A glimmer of positive news emerged from the construction sector, with ready-mixed concrete production recording its first annual increase in over three years. According to Statistics New Zealand data, volumes in the fourth quarter of 2025 were up 0.4% compared to the same period a year earlier. This growth was largely driven by strong performance in Christchurch, up 11%, and the Otago/Southland region (including Queenstown and Wanaka), which saw a 13% increase. However, Auckland continued to lag, experiencing a 3.5% decline, and Wellington also saw a decrease of 1.2%.

Insurance Crisis Deepens

The affordability of insurance remains a significant concern for New Zealand homeowners. Approximately 60,000 homes are currently uninsured, according to the chair of the Natural Hazards Commission. The Commission’s chief executive characterized insurance affordability and current financial settings as a “downstream symptom” of increasing risk, with Southern Response anticipating further claims. This suggests a growing vulnerability to natural disasters and the potential for significant financial hardship for affected homeowners.

Dairy Prices Offer a Boost

On the agricultural front, dairy prices continued their upward trajectory. The overnight Global Dairy Pulse auction showed gains across key products. Whole milk powder (WMP) was up 0.4% from the previous week, representing a 14% increase since the beginning of 2026. Butter prices saw a more substantial rise, up 6.8% week-on-week and 18% year-to-date. Skim milk powder (SMP) also increased, rising 1.7% from last week, also up 14% so far this year. While some of this increase may be attributable to a weakening US dollar, the positive trend will be welcomed by the dairy industry.

Corruption Concerns Escalate

A troubling development is the continued decline in New Zealand’s Corruption Perceptions Index score. For the fourth consecutive year, the score has fallen, representing a 10% overall drop. Despite still ranking highly alongside Norway, the slide reflects diminishing confidence in the integrity of the public sector. Recent prosecutions involving bribery, deception, misuse of public funds, and even COVID-related fraud have highlighted systemic weaknesses. The extent of corruption within the private sector remains unknown, but is unlikely to be less severe.

Monetary Policy Under Review

The government has launched an independent review of the RBNZ’s monetary policy response to the COVID-19 pandemic. Finance Minister stated the purpose of the review is “to learn from experience.” The review will be conducted by Athanasios Orphanides, a former governor of the Central Bank of Cyprus, and David Archer, a former Reserve Bank assistant governor. The timing of the review, prior to the election, has raised some eyebrows, with some suggesting it is politically motivated.

Interest Rate Outlook Shifts

Westpac economists are now forecasting six OCR hikes over the period to the end of 2027, bringing the official cash rate back to 4.0% or higher. This represents a significant shift in expectations, as the OCR was last at 4% in February 2025. The forecast suggests a more restrictive monetary policy stance than previously anticipated, aimed at keeping inflation close to 2%.

Market Performance: A Mixed Bag

The New Zealand equity market experienced a slight decline on Wednesday, with the NZX50 index down 0.2% as of 3:00 PM. Over the past five trading days, the index has gained 0.5%, and it is up 4.4% from six months ago and a year ago. Kathmandu, Sky TV, a2 Milk, and Investore Property led the gains, while Serko, EBOS, Tourism Holdings, and Freightways were the main decliners. Market heavyweight Fisher & Paykel Healthcare experienced a yoyo pattern, down -1.5% on Wednesday.

ASB Reports Solid Profit, Increased Staffing

ASB’s CEO expressed increased confidence in the economy as the bank reported a half-year profit increase of just 1%, despite a rise in its net interest margin to 2.35% from 2.24% a year ago. The increase in margin was attributed to higher home lending margins. ASB also increased its staffing levels from 6272 to 6897 employees. Parent company CBA also reported a strong profit result, with its stock price rising 6.8% today, although still up only 4.8% from a year ago.

Australian Housing Market Shows Strength

Across the Tasman Sea, the Australian housing market demonstrated resilience in the December 2025 quarter. New owner-occupier loan commitments rose 7.5% year-on-year, with a value increase of 18.9%. Investor loan commitments saw even stronger growth, up 24% in number and 32% in value.

Global Economic Trends: China’s Deflationary Pressure

In contrast to the inflationary pressures seen in many parts of the world, China continues to experience deflationary pressures. The annual inflation rate eased to 0.2% in January, its lowest level since October and below market expectations. Food prices fell, and non-food inflation slowed significantly. Producer price deflation also eased, but remained in negative territory.

Currency and Commodity Movements

The New Zealand dollar remained relatively stable against the US dollar, holding at just over 60.5 US cents. It weakened slightly against the Australian dollar, falling to 85.3 AU cents. Oil prices were little changed, with American oil prices at just over US$64.50 per barrel and Brent crude at just over US$69 per barrel. Gold prices edged slightly higher, rising to US$5048 per ounce. Bitcoin experienced a modest retreat, down 2.0% to US$68,979.