New Zealand Faces Economic Headwinds as Next Government Weighs Policy Options

New Zealand's economy faces challenges like high inflation, rising interest rates, and slowing growth that will constrain the next government's policy options.

The major political parties have proposed measures like tax cuts and reducing sales taxes to ease cost of living pressures on households.

The central bank aims to keep interest rates high to control inflation, limiting the fiscal stimulus the new government can provide.

New Zealand has large deficits, high household debt and a widening current account deficit that raises concerns over its credit rating.

Whoever wins the election will face tough trade-offs between stimulating the economy, reducing debt and keeping the central bank focused on lowering inflation.