Outlook dims as cashflow tightens, but capital investment and customer focus remain priorities
New findings from the latest MintHC Business Insights report, produced in partnership with Tony Alexander, revealed widespread disappointment among Kiwi businesses about economic performance in 2025 so far.
“Concerns about the state of the NZ economy rose firmly at the start of this year and have remained high,” Alexander said, citing persistent concerns about client demand, regulatory burden, and economic uncertainty.
Notably, concerns about interest rates have trended downward, but this hasn’t translated into a more optimistic business climate.
“It takes more than the absence of high interest rates to drive an economy forward,” Alexander said.
This comes as economists highlight signs of a broad-based GDP recovery and the impact of recent rate cuts, though lingering inflation risks mean the Reserve Bank is now expected to hold the OCR steady until August before considering further easing.
Cash flow squeezed, closures looming in retail and hospitality
Businesses across sectors are feeling the pinch of tight cash flow, with retail and hospitality particularly vulnerable.
“Cash flows generally remain constrained and in some sectors such as retailing and hospitality expectations are for further business closures,” Alexander said.
However, debt levels and access to finance appear to be less of a concern, with a declining number of businesses citing funding as a barrier.
Capital expenditure plans defy gloomy backdrop
Despite operating headwinds, a high proportion of businesses are still planning to increase spending on key areas like customer retention, digital transformation, and strategic development.
“The four top areas yet again of spending intentions are… retaining existing customers, development of strategy, technology/digitisation, and social media policy,” Alexander said.
Meanwhile, climate-related initiatives and stockpiling remain low on the priority list. The report noted a positive uptick in equipment investment, with a net 12% of firms planning to spend more – “the strongest reading for the duration of our survey from March 2023.”
Staff morale wavers, but hiring still manageable
While a net 7% of businesses say it’s still relatively easy to find quality staff, concerns about morale are creeping back.
“Only a net 4% of our survey respondents expect that staff morale will improve in the coming year, down from a peak net 19% reached in October last year,” Alexander said.
Wage pressures also appear contained, with businesses hesitant to commit to further pay increases or training investment for now.
Business revenue expectations rise – hope for 2026
Despite current conditions, optimism for the year ahead has lifted. A net 45% of businesses expect improved revenue in the next 12 months, up from 37% in the previous survey.
“Businesses currently are widely reporting that 2025 is proving to be a disappointment,” Alexander said. “But hope springs eternal… surviving to ’26 surely will.”
Access the full MintHC Business Insights for more information and details.
