Is Australia Better Than New Zealand?
As we move further into 2025, a growing economic contrast between New Zealand and Australia is becoming increasingly clear. From interest rates and employment figures to inflation, wage growth, and household finances, the two economies are charting noticeably different paths.
We break down the latest economic indicators from both countries, explaining what each figure means and how it shapes the outlook for New Zealand. Through this comparison, we aim to highlight the structural differences, shared challenges, and strategic implications for Kiwi households, businesses, and investors.
Monetary Policy & Interest Rates
We break down the latest economic indicators from both countries, explaining what each figure means and how it shapes the outlook for New Zealand. Through this comparison, we aim to highlight the structural differences, shared challenges, and strategic implications for Kiwi households, businesses, and investors.
Monetary Policy & Interest Rates
Indicator |
New Zealand |
Australia |
Cash Rate / OCR |
3.25% |
3.85% |
New Zealand's lower official interest rate suggests the Reserve Bank is trying to support the economy by making borrowing cheaper. Australia's rate is higher, which helps keep inflation in check but also makes loans more expensive.
For Kiwi households, this means mortgage rates may be a little easier to manage, but lower rates also signal a sluggish economy. For businesses, cheaper borrowing costs might help with cash flow or expansion, though weak consumer spending could limit returns. Investors may see less incentive to hold New Zealand assets, especially compared to Australia.
Growth & Labour Market Conditions
For Kiwi households, this means mortgage rates may be a little easier to manage, but lower rates also signal a sluggish economy. For businesses, cheaper borrowing costs might help with cash flow or expansion, though weak consumer spending could limit returns. Investors may see less incentive to hold New Zealand assets, especially compared to Australia.
Growth & Labour Market Conditions
Indicator |
New Zealand |
Australia |
Economic Growth |
-1.1% |
1.3% |
Unemployment Rate |
5.1% |
4.1% |
Employment Growth |
-1.2% |
2.2% |
Wage Growth |
2.9% |
3.4% |
Over the past year, New Zealand's economy shrank while Australia's continued to grow. More New Zealanders are out of work, and fewer jobs are being created.
For households, this means finding or keeping a job has become harder, and wages aren’t rising as quickly. For business owners, that translates to tighter demand and possibly more cautious customers. Investors may find less growth potential in consumer-driven sectors unless export activity offsets the weakness.
Earnings, Inflation & Living Costs
For households, this means finding or keeping a job has become harder, and wages aren’t rising as quickly. For business owners, that translates to tighter demand and possibly more cautious customers. Investors may find less growth potential in consumer-driven sectors unless export activity offsets the weakness.
Earnings, Inflation & Living Costs
Indicator |
New Zealand |
Australia |
Average Weekly Earnings (NZD) |
$1,666 |
$1,634 |
Weekly Earnings Growth |
4.58% |
5.5% |
Inflation |
2.5% |
2.4% |
On paper, New Zealanders earn slightly more than Australians each week. But wages in Australia are rising faster and inflation is slightly lower, which gives Australians more buying power.
In practice, this means NZ households are feeling the pinch as essentials like food and housing costs take up more of their income. Businesses could see flatter retail activity, and investors might shy away from sectors tied to domestic consumption.
Housing & Household Finances
In practice, this means NZ households are feeling the pinch as essentials like food and housing costs take up more of their income. Businesses could see flatter retail activity, and investors might shy away from sectors tied to domestic consumption.
Housing & Household Finances
Indicator |
New Zealand |
Australia |
Average Residential Price (NZD) |
$903,928 |
$1,083,427 |
Household Saving |
0.5% |
5.2% |
Household Debt To Income |
169% |
182% |
New Zealand homes are cheaper than in Australia, but households here are saving very little and carry high levels of debt compared to their income. It’s important to note that the 0.5% saving rate is only an estimate, as updated data isn’t yet available. Early signs suggest not much has changed.
This means many New Zealand households are financially stretched and have little room for unexpected expenses. For businesses that depend on discretionary spending (retail, travel, dining etc) this can mean less predictable income. Investors should be alert to the risks in housing and finance sectors, where household stress may lead to defaults or lower demand.
External Position & Currency
This means many New Zealand households are financially stretched and have little room for unexpected expenses. For businesses that depend on discretionary spending (retail, travel, dining etc) this can mean less predictable income. Investors should be alert to the risks in housing and finance sectors, where household stress may lead to defaults or lower demand.
External Position & Currency
Indicator |
New Zealand |
Australia |
Net Foreign Liabilities (% of GDP) |
49.4% |
24.2% |
Exchange Rate vs USD |
$0.59 |
$0.64 |
New Zealand owes more to overseas lenders as a share of its economy than Australia does, and our currency is weaker.
This affects everyday life: imported goods and overseas travel cost more for Kiwi households. Exporters may benefit from the lower NZ dollar, making their products cheaper abroad, while businesses that rely on imports may face higher costs. Investors could see higher risks in lending to or investing in NZ due to this heavier reliance on foreign funding.
Demographics & Population Growth
This affects everyday life: imported goods and overseas travel cost more for Kiwi households. Exporters may benefit from the lower NZ dollar, making their products cheaper abroad, while businesses that rely on imports may face higher costs. Investors could see higher risks in lending to or investing in NZ due to this heavier reliance on foreign funding.
Demographics & Population Growth
Indicator |
New Zealand |
Australia |
Population Growth |
0.91% |
1.70% |
Australia’s population is growing nearly twice as fast as New Zealand’s, which helps drive economic activity.
For New Zealand, slower growth might reduce pressure on infrastructure, but it also means less overall demand for goods, services, and housing. Businesses may find fewer growth opportunities unless they look to export markets. Investors may prefer Australia for its larger, faster-growing consumer base.
What the Contrast Means for New Zealand
New Zealand and Australia are on two diverging economic paths. Across growth, employment, earnings, savings, and external stability, New Zealand’s figures indicate a more vulnerable and slower-moving economy. While some metrics such as house prices and debt are relatively lower, these are outweighed by weaker income growth, minimal household savings, rising unemployment, and higher exposure to external debt.
For households, this means tighter finances and less room for shocks. For businesses, slower demand and employment conditions challenge growth and pricing strategies. For investors, lower interest rates and weaker structural indicators may reduce risk appetite for NZ-specific assets.
The broader takeaway? New Zealand may need to lean more heavily on fiscal discipline, export performance, and structural reform to close the gap with Australia and build greater economic resilience.
For New Zealand, slower growth might reduce pressure on infrastructure, but it also means less overall demand for goods, services, and housing. Businesses may find fewer growth opportunities unless they look to export markets. Investors may prefer Australia for its larger, faster-growing consumer base.
What the Contrast Means for New Zealand
New Zealand and Australia are on two diverging economic paths. Across growth, employment, earnings, savings, and external stability, New Zealand’s figures indicate a more vulnerable and slower-moving economy. While some metrics such as house prices and debt are relatively lower, these are outweighed by weaker income growth, minimal household savings, rising unemployment, and higher exposure to external debt.
For households, this means tighter finances and less room for shocks. For businesses, slower demand and employment conditions challenge growth and pricing strategies. For investors, lower interest rates and weaker structural indicators may reduce risk appetite for NZ-specific assets.
The broader takeaway? New Zealand may need to lean more heavily on fiscal discipline, export performance, and structural reform to close the gap with Australia and build greater economic resilience.
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