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New Zealand under PM Luxon pursues a dual strategy of economic liberalization and defense buildup while facing a brain drain to Australia and a stagnating economy. The government spares intelligence from budget cuts, boosts defense spending by 6%, and eases golden visa criteria, but society grapples with emigration and new citizenship tests.
May 2026
Week of May 18, compared to 12-week average
New Zealand's economy shows mixed signals: food inflation slowed to 2.6% in April, but Wellington faces a six-month wait to halt a sewage spill, highlighting infrastructure strain. The government eased golden visa criteria to allow philanthropy and seeks broader economic cooperation with Bangladesh, while Air New Zealand launched bunk beds on flights.
PM Luxon promotes middle-power cooperation in the Indo-Pacific and signed a trade pact in Singapore, while Buckingham Palace hosted a historic meeting between King Charles and the Māori Queen. The budget spares defense and intelligence agencies from cuts, and Sri Lanka's Vijitha Herath received a traditional Māori welcome during an official visit.
New Zealand's 2026 defence budget increases by 6%, with a boost for fleet and drones. Japan and the UK compete to build warships for New Zealand, signaling a shift toward naval modernization.
New Zealand faces a brain drain to Australia amid a stagnating economy, while the government tightens English language requirements for low-level workers and introduces a citizenship test for migrants from 2027. A M5.8 earthquake struck east of Pauanui, adding to societal pressures.