An expert doubts an expected jump in unemployment next year will have a major impact on most New Zealanders.
The Treasury released its half-year economic and fiscal update on Wednesday, highlighting a tough outlook with a recession forecast and unemployment expected to rise.
Treasury's outlook was largely in line with last month's Reserve Bank projections of New Zealand entering a shallow technical recession next year.
But Milford Asset Management senior investment analyst Frances Sweetman told AM the recession would be largely felt on the edges of the economy.
"The two things that are predicted to happen are, first of all, unemployment's expected to rise but only back to a more normal level - so that shouldn't hurt too many Kiwi families," she said on Thursday.
Sweetman said mortgage rates would also continue to rise. The Reserve Bank hiked the official cash rate (OCR) from 3.5 to 4.25 percent last month and was expected to increase it by another 75 basis points when it first meets in the new year.
"That's going to squeeze our budgets and we know that's already happening, but we've got about the same again to go next year," Sweetman said of the OCR increases.
Again, however, she said that impact wouldn't be spread evenly across the economy.
"More than half of homeowners in New Zealand don't even have a mortgage so that will, again, be concentrated on… predominantly first-home buyers or recent-home buyers, people who have upgraded and taken on a big mortgage and locked in some of those low rates - it will hurt that proportion of the population but it's not huge."
Treasury forecasts showed the 90-day interest rate, which closely followed the path of the OCR, was expected to move up above 5 percent next year before dropping back to 2.1 percent in late 2026.
