Home > Updates > Navigating the economic recovery: What NZ businesses need to know
After years of economic uncertainty, so far 2025 has shaped up to be a focal point for small and medium sized business across New Zealand. Inflation pressures easing, interest rates stabilising and general confidence on the rise, many business owners are cautiously optimistic. Recovery will not be a return to the old but a step forward into the new. This means adapting to a new landscape with fresh opportunity, with an eye cast over the shoulder keeping the hard learned lessons close.
ANZ’s recent Business Outlook Survey showed that business confidence is improving, notably across professional services, construction and tourism. Business owners are feeling a growing sense of optimism about future growth, but this confidence is tempered by ongoing cost pressures. Energy prices, insurance premiums, digital security and constant wage changes continue to squeeze margins forcing businesses to find alternative operating models and rethink business strategy.
Many SME’s are also facing sustainability reporting and the big AI question. In many ways, exciting challenges to navigate. Both necessary investments but require careful planning.
Now is the time to drill down into your pricing strategies and cost structures. We suggest a detailed cashflow forecast, underpinned by a robust strategy to help identify pressure points and lay a foundation to ongoing improvement. Forecasting should be an ongoing activity within a business, not just an annual budgeting exercise.
With recent interest rate drops and noise of further reductions to come, the lower cost of borrowing places capital improvements back on the table. The Governments recent Investment Boost tax deduction has gained momentum, but is not without its limitations.
Whether there is a need for equipment upgrades, investment into technology, digitising operations or expanding the premises, capital expenditure is once again front of mind. Capital investment should be aligned with business strategy and long-term value creation. Too often SME’s invest reactively, rather than through purposeful analysis and strategic planning.
The post pandemic era has taught us the value of agility and the need to pivot at a moments notice. In 2025, resilience means having people and purpose. It means having systems and financial buffers capable of weathering uncertainty. Many businesses have diversified revenue streams, focused on building relationships and maintaining lean operations driven from weak economic conditions. Resilience also means being digitally capable, business that embraced cloud-based software, e-commerce and remote working tools are now better adapted to success in the business landscape ahead. There are still many businesses in New Zealand who have not taken action and remain exposed.
Consider scenario planning, model economic impacts and revenue troughs on your business – what would a 15% drop in revenue look like for your business? What if a key supplier fails?
It takes us back to the old adage, “if you fail to plan, you plan to fail”.
As we head towards the final quarter of 2025 and plan for 2026, we encourage you to work with your trusted advisor, build that cashflow forecast, and spare the time to revitalise the business value proposition and strategies. 2026 is shaping up to be a pivotal year for many NZ business, start planning now.
If you’d like to discuss what the economic recovery means for your business and how best to prepare for 2026, get in touch with a Nexia advisor today.
Nexia New Zealand is one of New Zealand’s leading full-service chartered accounting and business advisory consultancy firms, offering the full range of chartered accounting, business advisory, corporate advisory, tax, audit, insolvency, liquidation and receivership services.
Nexia New Zealand has four offices throughout New Zealand: Victoria Street in Christchurch, Albany on Auckland’s North Shore, Newmarket in the Auckland CBD and Hastings in Hawke’s Bay.
Reach out to one of our trusted Nexia Advisors. We have offices in Christchurch, Auckland and Hastings.
