New Zealand firms have grown more cautious about investment in recent years, NZIER report finds

A new report from the New Zealand Institute of Economic Research (NZIER) finds that companies across the country are weighting liquidity and short-term resilience more heavily than long-term capital expenditure when making investment decisions. The report points to a shift in risk perception over recent years against a backdrop of high energy prices, rate volatility and uncertain global demand.

The data set shows that small and medium-sized firms have been postponing capital projects, while larger companies are tying spending plans to tighter budgeting cycles. NZIER analysts argue that, with household savings rising and rate expectations volatile, this trend risks pulling investment's share of GDP lower at the macro level.

The report could shape both the Reserve Bank of New Zealand's monetary-policy debate and the government's planning of capital incentives. Business groups say a more predictable tax regime and public support for energy infrastructure could rekindle investment appetite. Private-sector investment surveys due in the coming quarter will clarify the trend.