The Reserve Bank of New Zealand has published its Financial Stability Report warning that the conflict in the Middle East and the closure of the Strait of Hormuz are disrupting global energy markets, lifting fuel costs in New Zealand and likely slowing the country’s economic recovery. It said the longer the conflict persists, the greater the risk to global financial stability, but banks’ capital and funding buffers and stress test results indicate they can withstand significant shocks and support customers facing stress, while also managing pressure in offshore funding markets. High diesel prices are having the greatest impact on transport and logistics, as well as primary industries including forestry and fishing, with implications for job growth and debt servicing. The central bank assesses the direct effects on New Zealand insurers as limited. Health insurers have raised premiums and adjusted policies after several years of high claims costs, improving solvency margins, and a stress test of life and health insurers is being progressed this year. The report also examines access to credit for smaller businesses, highlighting elevated borrowing costs and opportunities to improve pricing transparency. Other topics include rising public debt pressures in major advanced economies as a potential global financial stability risk for New Zealand, the link between general insurance coverage and financial stability, and recent work to strengthen banking system resilience through more intensive supervision, enforcement and resolution approaches, including the outcome of the review of capital settings for deposit takers.
Reserve Bank of New Zealand 2026-05-05
Reserve Bank of New Zealand warns Middle East conflict and Strait of Hormuz closure are slowing New Zealand’s recovery while banks remain resilient
The Reserve Bank of New Zealand’s Financial Stability Report warns that Middle East conflict and potential closure of the Strait of Hormuz are disrupting global energy markets, lifting fuel costs and likely slowing New Zealand’s recovery, though banks’ capital and funding buffers and stress tests indicate resilience. It highlights pressures from high diesel prices on transport, logistics and primary industries, limited direct effects on insurers alongside improving health insurer solvency, and elevated borrowing costs and transparency issues for smaller businesses. It also flags rising public debt in major economies, the role of general insurance in stability, and work to strengthen banking resilience through more intensive supervision, enforcement, resolution approaches and revised capital settings.