Market Update: We break down the business implications, market impact, and expert insights related to Market Update: PM launches National’s election pitch, ‘optimistic’ on economy – Full Analysis.
PM Christopher Luxon says there’s “no room for extravagant election promises” as he defends his economic management while setting the scene for National’s pitch to voters in a state of the nation address.
On foreign affairs, he also suggested the “rules-based system was rupturing” abroad, with trade protectionism making a “raging comeback” globally. Domestically, Luxon reaffirmed the view that Budget 2026 would continue to focus on “more savings”.
In his speech to the Auckland Business Chamber today, the National Party leader acknowledged the economic recovery had been frustrating for many Kiwis.
He suggested tariff shocks last year had made it feel “like we were back at square one”.
“I know many of you will be frustrated that this recovery, now starting to blossom nationwide, has taken so long to get traction,” the Prime Minister said
“For many months it felt like the improving economic conditions at farm gates and on the main streets of Christchurch and Queenstown would never filter through to Queen St, Newmarket and Lambton Quay.
“And in the middle of last year, when emerging green shoots were rapidly cut down by tariff shocks and global uncertainty, it felt like we were back at square one.
“That period was difficult, especially here in Auckland.
The growth followed a revised 1% fall in the June 2025 quarter. (Source: 1News)
“But I remain of the view that we got the balance right. There were calls at the time for a big fiscal stimulus and to open the immigration gates and pump up house prices.”
Luxon’s speech comes as the political year kicks into gear, with both Labour and National holding caucus retreats this week before Parliament returns on January 27.
In his address, he pointed to last week’s figures showing business confidence at its highest since 2014 and manufacturing growth at its strongest since December 2021.
“I feel more confident than ever that the recovery has now arrived and Kiwis can look forward to a year which is brighter than the last few,” he said, also highlighting the September quarter’s GDP figures which were up 1.1%.
“In short, there’s real cause for optimism.”
The speech, released to journalists on party political letterhead, focused heavily on the contribution of National ministers and National Party policy. There was no mention of his coalition partners ACT or New Zealand First in the speech.
Luxon highlighted his party’s recently-announced policy on lifting default KiwiSaver contribution rates and National ministers’ major NCEA and RMA reform initiatives.
But one KiwiSaver provider says there’s a major flaw that needs fixing first. (Source: 1News)
He also mentioned his party’s focus on education, law and order, and economic management, while only mentioning healthcare once.
“There will be more savings in this year’s Budget and no room for extravagant election promises. Let’s be straight up with each other. Any party that wants to ramp up spending is being economically irresponsible,” Luxon said.
The PM did not reveal the election date in his address today, but he has previously said he would do so early in 2026, with speculation that it could come as soon as this week.
Rules-based system ‘rupturing’ – PM
The Prime Minister spoke today in his first public appearance since returning from the summer break, marked by events abroad and actions by US President Donald Trump.
US troops captured and ousted ex-Venezuelan leader Nicolás Maduro while the American president took an increasingly aggressive stance on acquiring Greenland, floating possible 10% tarrifs for European nations opposed to his plans.
Without making direct reference to events that had taken place over the summer, Luxon spoke in general terms about the shifting international order.
The US president says they need the semiautonomous territory of Denmark “for national security”. (Source: 1News)
He said New Zealand must brace for a more volatile world where “tariffs and protectionism have made a raging comeback”.
“Today, our global rules-based system is rupturing,” he said.
“In an age of sharper competition, we’re seeing a pattern of countries respecting international law only when it suits them and ignoring the rules when it does not.”0
He added: “Our future prosperity can no longer be treated as an inevitable by-product of global rules and institutions.
“Trading arrangements are becoming less certain and less efficient, as businesses adapt to a world where tariffs and protectionism, once out of fashion, have made a raging comeback.”
The PM said the government had “acted carefully and decisively” against this backdrop, pointing to upgraded partnerships across the Indo-Pacific and the recently concluded free trade agreement with India.