New Zealand's economy is set to expand next year, as several key indicators point to economic recovery.

Kiwibank's latest bi-annual report forecasts a 2.4 percent growth for 2026, with boosted household confidence, an improved property sector, and a stabilising labour market.

The review cites low interest rates as the leading drivers of growth.

Economist Sabrina Delgado says there's a broad base for recovery, which comes as relief after 2025.

"We did expect a recovery to sort of start taking place in 2025 this time last year - it took some hits and had some delays and it's just now that we're starting to see the signs of recovery taking foot."

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