New Zealand Institute of Economic Research (Inc)
Media Release, 13 May 2026
Embargoed until 10 am, Friday 15 May 2026
New Zealand firms appear more cautious about investment in recent years, according to a new NZIER Insight released today. The Insight examined whether New Zealand businesses are showing evidence of changes in investment behaviour and risk appetite. Since the GFC, investment in productive assets (capital) has not kept pace with the workforce, raising questions about whether firms have become more cautious about long-term investment.
“Business investment is critical to productivity, innovation, and long-term growth in living standards,” the authors say. “When firms invest in new equipment, buildings, technology, and innovation, they increase the economy’s capacity to produce more goods and services. But when firms delay investment, capital renewal and productivity growth can slow over time.”
Firms’ investment expectations are closely linked to expected profitability, but recent balance sheet and financing indicators suggest a more cautious investment environment. The report notes that the increase in current assets may also reflect inventory accumulation, receivables growth, or valuation effects, rather than a deliberate shift away from long-term investment. At the same time, higher borrowing costs and tighter credit conditions have made it harder for businesses to take on investment debt.
“Since 2018, current assets have increased as a share of total assets across industries. This may indicate that firms are placing more weight on liquidity and short-term resilience, although the trend should be interpreted carefully,” say the authors.
NZIER’s analysis highlights that firms have been operating under increased uncertainty, higher interest rates, and tighter credit conditions, which have led to a more cautious investment approach.
The authors clarify that “this does not necessarily point to weak firm fundamentals. It may reflect rational risk management by businesses facing uncertain demand and higher financing costs. However, if weaker investment persists, it could slow the renewal of capital, delay innovation, and hold back productivity and wage growth over time.”
NZIER concludes that understanding changes in firm investment behaviour is important for policymakers and business leaders seeking to support sustainable, long-term economic growth in New Zealand. “New Zealand’s future prosperity depends in part on firms being willing and able to invest. The challenge is to ensure that the policy and financing environment supports productive investment while recognising the uncertainty firms are facing.”
For further information, please contact:
Roshen Kulwant
Senior Economist
roshen.kulwant@nzier.co.nz 027 376 8258
