Economic uncertainty top worry for NZ business leaders

According to Datacom's latest Business Outlook Survey, economic uncertainty remains the foremost concern for New Zealand business leaders as they move into 2025.

The survey highlights that 77% of senior business leaders in organisations with 100 or more employees perceive economic uncertainty as a threat, a significant increase from just 13% recorded in the previous year. This trend suggests a heightened focus on productivity and growth, identified as top priorities by New Zealand companies, with workplace productivity prioritised by 29% of respondents and growth by 28%.

Data also indicates a decreased emphasis on staff retention and recruitment, which has dropped to a fifth priority, cited by only 9% of business leaders surveyed.

Justin Gray, Datacom's Managing Director, commented on the results, stating, "The past two years have been challenging for businesses as New Zealand navigated a recession but the outlook for 2025 is promising, with recovery gaining momentum. The Business Outlook Survey findings show that while economic uncertainty remains a key concern, New Zealand businesses are demonstrating resilience by focusing on productivity and growth, which, if we can get it right, will set the stage for long-term success."

Business leaders also identify technological advancements such as AI and automation as significant opportunities for 2025. The survey reveals that AI, automation, and data optimisation are considered major technology opportunities by 46%, 41%, and 40% of respondents, respectively.

With 68% of businesses planning to increase technology investments, Gray highlighted the importance of these tools, saying, "It is encouraging to see a growing understanding of the value that automation and AI, particularly generative AI, can deliver. Our State of AI Index this year showed that among those organisations already using AI, 80% were reporting a positive impact on business operations."

Gray noted the increase in AI adoption, observed from 48% in 2023 to 66% in 2024, as businesses recognise the efficiency and opportunities AI can offer.

"The results are there for organisations that take the time to identify the problems that AI can help them solve, and where it can deliver efficiency and new opportunities. That's what our teams are focused on, and creating tools and platforms that derisk AI opportunities or address obstacles to adoption, for example, our Enterprise AI Assistant which allows people to safely and securely leverage their own organisational data in their own environment," Gray explained.

The survey also underscores practical challenges in adopting AI and emerging technologies, with budget constraints (34%) and a lack of skilled resources (15%) identified as significant obstacles.

Gray commented, "Technology has enormous potential to transform organisations, but businesses need the right support to address skills gaps, budget limitations and adoption frameworks. With proper investment and governance, tools like generative AI can drive significant growth and innovation."

Cybersecurity remains another critical issue, with 35% of New Zealand businesses having experienced a significant cyber-attack in the last year, a number which rises to 53% among companies with more than 200 employees.

Concerning government support, there has been a shift in priorities from boosting the economy to focusing on export opportunities, with 87% of respondents urging the government to prioritise economic growth and 49% calling for a focus on export opportunities.

Gray said, "Exporting is no longer a peripheral strategy for New Zealand businesses – it's becoming a core pathway to long-term success. Exports have the potential to turbocharge our economy. It's encouraging to see exports going from a side conversation to front-and-centre. This reflects a growing recognition that global engagement isn't just good for businesses; it's critical for simulating the New Zealand economy."

Assessment of the government's performance is mixed; 65% of larger businesses commend government support, whereas only 49% of smaller entities echo this sentiment. As Gray pointed out, New Zealand's tech sector serves as an example of resilience, achieving a 7.7% revenue increase despite challenging conditions.

The insights are derived from a survey conducted by Curia Market Research, which involved 200 senior business leaders from New Zealand companies with over 100 employees, carried out in December 2024.