Total capital expenditure

IBISWorld forecasts total capital expenditure to tumble by 4.9% in 2024-25, to $68.4 billion. This decline follows expenditure drops over the year, stemming from slumps in both private and public sectors. The anticipated drop in public capital expenditure is primarily attributed to the New Zealand economy's near-complete recovery from the pandemic, which diminishes the necessity for extensive government support. In alignment with this, the New Zealand Government's (Te Kawanatanga o Aotearoa) Budget 2024 statement states the need for stringent fiscal discipline concerning capital expenditures. Private capital expenditure is also expected to fall during 2024-25, in line with dwindling construction expenditure and negative business confidence.

Total capital expenditure typically increases over the long term, due to the effects of population growth and expansion in national GDP. Private capital expenditure accounts for the majority of overall capital expenditure, and usually accounts for between 70-80% of total capital expenditure. Private capital expenditure has inched downwards as a proportion of total capital expenditure over the past five years. Capital expenditure by the public sector has risen over the past decade. Similar to private capital expenditure, public sector capital expenditure typically rises over the long term, primarily due to population and GDP growth. However, growth in public sector capital expenditure can also be driven by natural disaster recovery efforts, to repair what was damaged or destroyed. Additionally, investments to help the economy recover from the COVID-19 pandemic have also led to growth in public capital expenditure over the past five years.

Both the public and private sectors have driven growth in total capital expenditure over the past five years. Delayed investments due to high business uncertainty felt early in the pandemic supported growth over the two years through 2022-23. Overall, IBISWorld forecasts total capital expenditure to inch upwards at a compound annual rate of 0.8% over the five years through 2024-25.