The Treasury-led event will target needed public projects
Venkat Raman
Auckland, February 10, 2025
New Zealand will host its first major Global Investment Summit in Auckland next month to woo international investors to participate in its major infrastructure projects.
The Treasury-led, two-day event on March 13 and March 14 will be inaugurated by Prime Minister Christopher Luxon in the presence of Cabinet Ministers, Diplomats, senior government officials and representatives of the private sector.
Accelerating Growth
Mr Luxon said that the Summit will highlight partnership opportunities for overseas investment in various sectors of the economy.
It is understood that participation in the Summit is restricted to 100 invitees (high-profile investors, business leaders and construction companies) from across the world and that it will showcase some of the major projects that the government proposes to implement over the next five years.
Mr Luxon said that his government is focused on accelerating the growth that New Zealand needs to lift incomes, strengthen businesses, and create opportunities for all Kiwis.
“That means we need to stop saying ‘No’ to growth opportunities like foreign investment and start saying ‘Yes.’ We are open for business, “ he said.
Mr Luxon has been signalling the preparedness of his government to usher in reforms to spur growth and attract foreign investment. This will include smarter and friendlier immigration policies, ease of doing business, regulating red tape and simplifying procedures. The government is also considering suitable changes to agricultural reforms.
Infrastructure, Transport and Housing Minister Chris Bishop said that New Zealand faced a ‘massive infrastructure gap,’ which can be filled by foreign investment and more partnerships.
“As well as showcasing upcoming infrastructure opportunities for partnership and investment, the summit will highlight changes to policy, regulation, and legislation that make it easier to do business here, along with other investment opportunities in a range of growth sectors and the Māori economy,” he said.
Investment Outlay: $70 billion to $ 120 billion
The New Zealand government has committed to investing between $70 billion to $120 billion in infrastructure over the next five years and desperately needs overseas investors as local businesses struggle to cope with the challenges of the economic decline.
Investment is sought in several key areas including Transport (enhancing road, rail, and public transport systems), Housing (addressing the housing shortage and improving residential facilities), Health (upgrading hospitals and healthcare facilities), Education (building and renovating schools and educational institutions) and Defence (strengthening national security infrastructure).
These projects were outlined by the New Zealand Infrastructure Commission.
Mr Bishop had spoken about the ‘Infrastructure Pipeline,’ which includes information on current, planned and anticipated infrastructure projects to maintain, renew and improve the infrastructure. The projects are submitted by organisations across the central government, local councils and the private sector, Mr Bishop said.
The need for overseas funds
New Zealand is slated for gradual economic recovery in 2025 and according to the Treasury, the economy is expected to strengthen after a protracted recession. With growth showing positive signs, unemployment is expected to decline by the middle of the year.
The Treasury projects nominal GDP to be around $427.3 billion in 2025. However, tax revenue forecasts have been revised downwards, with core Crown tax revenue expected to be $120.6 billion. Public expenditure is anticipated to remain high as the government continues to support economic recovery and address social needs. The fiscal deficit is projected to narrow gradually, but public debt levels will remain elevated due to past borrowing and ongoing fiscal support measures.
The International Monetary Fund projects New Zealand’s real GDP growth at 1.9% for 2025. Inflation is expected to stabilise around 2.2%, aligning with the Reserve Bank of New Zealand’s target. The IMF has emphasised the importance of balancing fiscal sustainability with economic growth, highlighting the need for structural reforms to enhance productivity and resilience.
Economists have also predicted a brighter economic outlook for New Zealand in 2025. Falling interest rates are expected to boost household spending and business activity. ASB anticipates gradual improvements in household finances and a positive impact on the housing market.
Financial Highlights
According to the Treasury, as of the end of November 2024, Core Crown Tax Revenue at $49.3 billion was in line with forecast, with GST being $0.2 billion (1.5%) above forecast, mainly offset by source deduction Tax Revenue which was $0.2 billion (0.7%) below forecast.
Core Crown expenses at $57.8 billion were $0.2 billion below forecast. The variance is mostly timing in nature and reflects multiple small variances across a range of functional classifications.
Both the operating balance before gains and losses (OBEGAL) and the operating balance before gains and losses excluding ACC revenue and expenses (OBEGAL) deficits were close to forecast at $4.7 billion and $3.9 billion respectively.
The Operating Balance Deficit of $0.1 billion was $1.7 billion less than the deficit forecast. This is largely owing to the variances to forecast in net gains and losses for the five months to November 2024, with net gains on financial instruments $1.1 billion higher than forecast and net losses on non-financial instruments $0.6 billion smaller than forecast.
The Core Crown Residual Cash Deficit of $6.5 billion compared to a forecast deficit of $5.9 billion. This resulted in an unfavourable variance of $0.6 billion and reflects earlier than forecast personnel and operating payments. This was marginally offset by higher-than-forecast tax receipts.
Net Core Crown Debt at $181.7 billion (43.1% of GDP), was broadly in line with forecast Net Core Crown Debt at $181.3 billion (43.0% of GDP). The nominal increase reflects additional borrowing to fund the higher-than-forecast core Crown Residual Cash Deficit.
Gross Debt at $192.1 billion (45.6% of GDP) was $0.7 billion higher than forecast largely owing to higher than forecast issuance of government stock due to the timing of debt issuance.
Net worth at $187.5 billion (44.5% of GDP), was $1.6 billion higher than forecast and largely reflects the operating balance results.
Overall, while the economic outlook for New Zealand in 2025 is cautiously optimistic, challenges remain. Public debt and deficits will need careful management to ensure long-term fiscal sustainability, and ongoing efforts to boost productivity and economic resilience will be crucial.
