Source: BusinessNZ
BusinessNZ Chief Economist John Pask says the recovery is welcome, but New Zealand is heading into a decade of difficult choices.
“While the outlook to 2027 is brighter, there are several major structural risks which are currently accelerating. An ageing population is set to drive superannuation and healthcare costs to unsustainable levels. Without reform, those two items alone could consume all income tax revenue by the late 2040s.
“At the same time, government debt has tripled since 2019 and continues to rise. We cannot borrow our way out of demographic reality.
“Difficult choices will need to be made, including mature thinking on the potential for asset recycling and greater competition in the delivery of government sanctioned services, such as ACC.”
Pask says that overall, business confidence is rising with most sectors showing signs of improvement – if a little uneven.
“On the bright side, our construction sector is looking up, agriculture continues to do well and tourism is rebounding as international visitor numbers return to pre-Covid levels.
“If New Zealand wants to avoid a major deterioration in living standards, then improving productivity, maintaining regulatory discipline, and attracting investment will be essential.”
The BusinessNZ Economic Conditions Index (ECI) for the December 2025 quarter sits at 13, which is up nine on the previous quarter, and up two on a year ago. The ECI is a measure of some of NZ’s key economic indicators. An ECI of reading above 0 indicates general economic conditions are improving overall, while below 0 means economic conditions are generally declining.
The BusinessNZ Planning Forecast for the December 2025 quarter is available now on the BuisnessNZ website.
