New Zealand looks undervalued in long-term outlook

CMC Markets has published a report on New Zealand's long-term financial outlook, finding that many New Zealanders remain optimistic about the country's future.

Research commissioned for the study found 48% expect New Zealand to be financially better off in 20 years, while 28% expect it to be worse off. The report brings together views from business, investment and economic figures on the factors that could shape the next two decades.

Among the strongest assessments came from Simon Bridges, Chief Executive of Auckland Business Chamber, who argued that the country's economic strengths are not fully recognised.

"I think, in the end, if New Zealand were a stock today, it's undervalued," Bridges said.

He pointed in particular to energy, arguing that the country's mix of renewable generation, water access and a stable operating environment could become more important as global electricity demand rises. Energy-intensive industries such as artificial intelligence and data infrastructure, he said, could favour countries able to supply both power and water at scale.

"Energy should be a massive competitive advantage for New Zealand," Bridges said.

The report identifies four linked themes in New Zealand's longer-term outlook: productivity, capital formation, technology and financial confidence. It argues that optimism alone will not be enough to improve living standards or broaden prosperity.

Chris Smith, Managing Director of CMC Markets NZ, said the country still has solid foundations but faces structural pressures that require a longer time horizon.

"New Zealand has many of the ingredients for long-term prosperity: a stable democracy, strong international connections, world-class expertise and businesses capable of competing globally," Smith said.

"But our traditional advantages are no longer enough on their own. Lower productivity growth, constrained access to capital, an ageing population and rapid technological change make it essential to look beyond the next economic cycle and take a longer-term view," he said.

Productivity focus

A central argument in the report is that lifting productivity will be critical if New Zealand is to raise incomes, strengthen companies and improve living standards. Contributors pointed to opportunities to move further up the value chain in sectors where the country already has expertise, including agriculture, tourism, professional services and technology.

Former Prime Minister and Finance Minister Bill English said productivity should remain at the centre of long-range economic policy. He argued that wealth creation depends on improving how countries use labour, capital and natural resources over time.

"Countries become wealthier when they enable continual improvement in how they use their people, capital and resources," English said.

The report also links future growth to investment choices, arguing that infrastructure, education and businesses that create lasting value will matter more than short-term gains. That reflects a wider concern in New Zealand business circles about weak productivity growth compared with other advanced economies.

Capital markets

Another theme is the growth of household investment. The report says KiwiSaver and digital investment platforms have drawn more New Zealanders into financial markets, creating a larger domestic pool of savings that could be directed towards businesses, infrastructure and new projects.

It notes that KiwiSaver has grown from its 2007 launch to more than $140 billion, underlining the scale of funds now available in the system. Deeper capital markets, the report argues, could help local firms expand and reduce reliance on offshore funding.

Lisa Turnbull, Chief Executive of Smart Invest NZ at NZX, is cited in the report as saying this growing pool of household savings offers an opportunity to support future growth. The report presents the trend as part of a broader shift towards wider public participation in investment.

Technology and confidence

Technology forms the third major thread. The report says artificial intelligence and cheaper digital tools are changing how people gather information and make investment decisions, potentially opening up forms of analysis once limited to professional investors.

At the same time, it argues that easier access to information will increase the importance of judgement, financial literacy and patience. In that sense, technology may widen participation, but not remove the need for informed decision-making.

The fourth theme is financial confidence. While the survey found net optimism about the country's long-term position, it also showed that a sizeable share of people remain unsure about their own prospects. According to the research, 28% of New Zealanders are not confident they will have enough wealth to achieve their personal financial goals over the next 20 years.

Smith said the report was intended to focus attention on choices being made now, rather than offer a precise forecast of the country's condition in two decades.

"The decisions made today about productivity, education, infrastructure, investment, technology and financial participation will compound over decades," he said.

"The opportunity ahead is not simply to become a wealthier country. It is to build a more productive, innovative and financially resilient one, and ensure more Kiwis can participate in that prosperity," Smith said.