New Zealand’s economy has hit rough waters. In the June 2025 quarter, GDP shrank by 0.9%, marking the third contraction in just over a year. Construction, manufacturing, and services all felt the squeeze, while households cut back spending under cost-of-living pressure.
The Reserve Bank has responded by cutting the Official Cash Rate to 3%, aiming to encourage investment and spending. But Treasury’s warnings of unsustainable debt highlight that government support won’t be limitless. For businesses, this downturn is a signal to act decisively.
What It Means for Business
- Credit will tighten: Banks are cautious, so cashflow planning is critical.
- Costs are rising: Efficiency and smart cost control are essential.
- Talent shifts: Layoffs in some industries may free up skilled workers.
- Innovation is key: Standing still risks falling behind competitors.
Silver Linings
Tough times also create openings. Affordable assets, access to new talent, and the urgency to digitise or streamline can give proactive businesses an edge.
LM4 Group’s Role
At LM4, we see these challenges daily. Through:
- Alignz Recruitment we connect businesses with talent, locally and through new migrant pathways.
- Puatala we upskill staff so companies stay competitive.
- Oyonnx we help streamline operations with smarter systems.
This is a storm, not a shipwreck. The businesses that survive are those that plan ahead, invest in people, and adapt quickly. At LM4 Group, we’re here to help Kiwi businesses not only weather the downturn, but emerge stronger when the recovery comes.