New Zealand Treasury forecasts show rising unemployment and wage pressure

New Zealand Treasury’s Pre-election Economic and Fiscal Update (PREFU) forecasts indicate sustained economic challenges for workers and public services. The New Zealand Council of Trade Unions (NZCTU) has highlighted that unemployment is expected to remain above 5 percent through most of 2027.

According to NZCTU President Sandra Grey, jobseeker numbers have increased by 15 percent since the current government took office, with those on Jobseeker Support and the Emergency Benefit forecast to exceed 200,000 throughout the forecast period. Additionally, real wages are projected to continue falling through 2026 and 2027.

While Treasury anticipates an upturn in growth, the report notes this is heavily dependent on net migration and favorable terms of trade. The forecasts were finalized prior to recent spikes in oil prices, which could potentially drive higher inflation and interest rates. Furthermore, government expenditure is projected to fall as a percentage of GDP, with core Crown expenses expected to drop below 30 percent by 2031.