U.S. ECONOMIC OUTLOOK
Real GDP saw a notable recovery in Q2 2025, growing at an annualized rate of 3.0% following a decline of 0.5% in Q1. Forecasts for the full year project growth between 1.4% and 1.6%, aligning with projections from the OECD and private sector analysts.
While inflationary pressures have lessened, they remain persistent. The headline Consumer Price Index (CPI) is tracking around 2.7% year-on-year, with core inflation estimates ranging from 2.9% to 3.1%.
Unemployment rates are steady, currently hovering between 4.2% and 4.3%, reflecting continued strength in the labor market.
The Federal Reserve has maintained its policy rate within the 4.25%–4.50% range and continues to emphasize a data-driven approach. Market participants are anticipating possible rate cuts later in 2025 if disinflation continues.
Recent tariff hikes have contributed to ongoing uncertainty, disrupting supply chains and constraining growth prospects
NEW ZEALAND ECONOMIC OUTLOOK
New Zealand’s GDP contracted during the first quarter of 2025 but is on a path to gradual recovery. Annual growth is expected to range between 1.4% and 2.0%, with momentum anticipated to build into 2026.
Inflation is now within the Reserve Bank of New Zealand’s target band of 1–3%, registering around 2.5%–2.7% for the June quarter.
The Official Cash Rate (OCR) was reduced to 3.00% in August, and additional rate cuts remain a possibility should economic conditions warrant further easing.
Unemployment stands at approximately 5.1%, with projections indicating a potential rise to 5.4% before stabilizing.
Key export industries, particularly dairy and red meat, continue to perform well, providing resilience despite softer global demand.
GLOBAL OUTLOOK AND RISKS
Trade tensions and increased tariffs are reshaping global supply chains, leading to higher costs and reducing overall trade volumes.
The risk of “stagflation-lite” persists in the U.S., as moderate economic growth coincides with ongoing inflationary trends.
Global uncertainty remains elevated due to fiscal imbalances, escalating geopolitical tensions in Asia and the Middle East, and a cautious stance from central banks.
Investors are encouraged to maintain diversified portfolios and pay close attention to policy updates as markets navigate these challenging conditions.
