Although New Zealand’s economy remains sluggish, there are signs of improvement, with 0.7% GDP growth in the December 2024 quarter. Both inflation and interest rates have decreased over the past year, and while it will likely take time for consumers and businesses to fully experience the benefits of these economic improvements, it appears many business leaders are already observing positive impacts.
The May 2025 BDO Business Wellbeing Index shows that 57% of business leaders felt positive about their overall business performance in the last two weeks - a 6% increase from the record low of September 2024 and a return to similar levels to March 2023. The sentiment uplift is more pronounced when considering business financials, where there’s a 13% increase in the number of business leaders feeling positive about this measure vs September 2024. Expectations for future business performance and financial positivity are also higher than last year.
While the Index’s general improvement in business performance sentiment is encouraging, the results are by no means overwhelmingly optimistic. Leaders are still less positive than they were during the post-election period of October 2023, and some recurring issues persist.
Looking at the key drivers of negative business performance sentiment, external economic and political factors remain the main pressure points for business leaders. Positivity about these measures lifts slightly when considering the next six months, but with the upcoming Government Budget (22 May) set to be a measured affair with “no lolly scramble” of new spending - plus the outcome of Donald Trump’s tariff announcements - confidence in the political and economic outlook may take time to recover.
Encouragingly, financial performance has dropped out of the bottom five business performance measures for the first time since March 2024. While cash flow remains a chief concern, it seems that longer-term business financial pressures may have eased somewhat.
For the first time since the initiation of the BDO Business Wellbeing Index survey, business leaders have identified business growth as a significant concern, ranking it among the five issues they feel least optimistic about.
As market conditions slowly improve, more business leaders will likely divert their focus from ‘survival mode’ in managing day-to-day finances to focus on potential avenues for business growth. Growth is a big concern for the Not-for-Profit and construction sectors, where less than a third of business leaders have felt positive about business growth in the last two weeks - likely reflecting the financial challenges these sectors are facing.
Growth is also a priority for the agricultural sector, with 30% of business leaders reporting active recruitment efforts in the past six months. This may be an attempt to increase capacity to take advantage of the improved market conditions seen across many agri subsectors.
While slightly fewer Māori business leaders have been actively hiring, this sector reported the highest average annual turnover growth over the past three years (45%), with agriculture following at 34% average annual growth.
With more encouraging economic signals and improved financial sentiment for many sectors, now could be the time to pick growth back up as a priority agenda item. But the question remains: how can businesses achieve and sustain growth after so long in survival mode?
As usual in our BDO Business Wellbeing Index, business leaders generally have a more optimistic outlook on future business performance compared to their current performance. This is especially true when comparing leaders’ current feelings about business growth, pipelines, and financial performance to their expectations for six months from now. These issues can make or break a business’ success, so it’s encouraging to see business leaders expecting them to improve considerably in the future.
Our BDO Business Wellbeing Index results show leaders are feeling good about their progress in meeting tax and other regulatory and compliance commitments – but this comes with a caveat. Ongoing international trade turbulence will play a major role in the nation’s economic recovery, and uncertainty over tariffs may hamper the positivity of business leaders when it comes to taxes, compliance, supply chains and overall business and financial performance. Time will tell how this plays out.
Looking at the expected issues for business leaders in six months’ time, the pressures remain similar to the current outlook, except for AI. Only 50% of business leaders expect to feel positive about their ability to leverage and adapt to new technologies (including AI), making it one of the top five future issues for business leaders. AI is advancing rapidly, so it’s no surprise that leaders are focused on how to effectively incorporate new technologies into their businesses and address any potential risks associated with AI.