By Shamubeel Eaqub, Chief Economist, Simplicity Research Hub

I look at Corporate Insolvency statistics and NZ Gazette's windup applications to keep tabs on how much, and where, business stress is showing up.


Business stress

The current level of business stress is very high. It's higher than during the Global Financial Crisis (see Figure 1 below on the left, showing Corporate Insolvency).

The NZ Gazette also gives quite a lot of detail about businesses being wound up. The Figure 2 shows the composition of windup applications in November 2024 (so it is very current).





Figure 1 & 2: Corporate Insolvencies & Windup application by industry


Around 70% are applications made by IRD, because of unpaid taxes (although up-to-date data on tax debt is not available). 

Should IRD let up? I don't think so, because taxes such as GST and PAYE aren't optional - if a business can't meet these basic obligations, then it is not a going concern.


Impact across industries

The industry breakdown is informative and not surprising, but telling:

• Construction and property development features highly, especially residential construction, and a lot of it is sub trades.

• Forestry is up there too. This has been weak for the last couple of years due to reduced demand from China.

• Logistics, mainly road transport, shows up a lot. This is because truck movements have been affected by the recession (although not in every region).

• Food services shows up with mainly small operations (fish & chip shops, etc), as does retail, often specialised retail (carpet retailing for example is suffering from the construction/renovation slowdown).

We’re deep and late into this recession. The RBNZ is cutting interest rates, which will provide relief, and they will cut further in the new year. Rising commodity prices and a weakening NZD will provide much-needed support to provincial NZ (a lower exchange rate increases our export revenue, but makes imports more expensive).

Slowing net migration and fiscal austerity will be headwinds, especially in urban areas. Some tough months to navigate still. The holiday period can be skinny on cashflows for many industries, but conditions for a recovery in 2025 are slowly taking shape.

As we near the end of the year, I wish economic conditions were better. But that is not to be for this Christmas.  Even in a recession most of us will be fine, but a small and significant portion will feel dramatic pain. If you’re feeling the pain, ask for help, it is not easy, but is easier with support. If you are in that fortunate majority, look after yourself, check in on your families and mates, and enjoy the coming holiday season.

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