New Zealand's Productivity Challenge: New Zealand
Selected Issues Papers, June 10, 2025
Source details
- Canonical URL
- New Zealand's Productivity Challenge: New Zealand
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Bibliographic details
- Authors: Monica Petrescu
- Published: June 10, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229012317.018
Overview
- Weak productivity growth continues to pose a challenge for New Zealand’s long-term economic prospects.
- Slow aggregate productivity growth is influenced by:
- remote geography;
- large agriculture and tourism sectors;
- costs and incentives for investment and innovation;
- features of the business environment;
- availability of financing options.
- The current juncture, with a nascent economic recovery underway, presents an opportunity for a multi-pronged reform agenda to address the productivity challenge.
Key findings
- Young, high growth firms appear to face financing challenges.
- Competition, innovation, and technological diffusion are low across sectors.
Constraints and drivers
- Structural factors:
- Remote geography.
- Large agriculture and tourism sectors.
- Market and institutional factors:
- Costs and incentives affecting investment and innovation.
- Business environment features that impede productivity-enhancing reallocation.
- Limited availability of financing options, particularly for young, high growth firms.
- Aggregate outcomes:
- Low competition, limited innovation, and slow technological diffusion contributing to weak productivity growth.
Policy implications and reform priorities
- Leverage the nascent economic recovery to implement a multi-pronged reform agenda aimed at:
- Improving financing availability for young, high growth firms.
- Strengthening competition across sectors.
- Encouraging innovation and technological diffusion.
- Reducing costs and improving incentives for investment.
- Enhancing features of the business environment that hinder productivity.
Content in this bundle
- New Zealand's Productivity Challenge; IMF Selected Issues Paper No. 2025/075; April 29, 2025