Number of businesses

IBISWorld forecasts the number of businesses to increase by 1.1% during 2025-26, to a total of 624,136 businesses. Inflation in New Zealand looks to have come down to be within the Reserve Bank of New Zealand's (Te Putea Matua) 1-3% target range. Since the later stages of 2024-25, the cash rate has been dropped from its recent peak of 5.5%, given that inflation came within the target range. Cuts in the cash rate promoted greater household consumption expenditure. This lead to new business opportunities in the current year, as a lower cash rate promoted greater spending throughout the economy, presenting opportunities for entrepreneurs to capitalise on. This economic cashflow was a catalyst for growth in the number of businesses, as it enabled more businesses to reach the $30,000 turnover inclusion threshold.

Several other factors influenced the number of businesses in New Zealand, including the GDP and population growth. Short-term shocks to the economy, including variations in interest rates and fluctuations in business confidence and consumer sentiment, can overshadow these long-term growth factors. The number of businesses generally exhibits low volatility, as the exclusion threshold of $30,000 annual turnover minimises volatility from unsuccessful business ventures.

The number of New Zealand businesses has grown modestly over the past five years. GDP and population growth have supported rising total aggregate demand, increasing the number of business opportunities available. While the pandemic stunted the business growth rate during 2020-21, government support mechanisms greatly reduced the death rate of businesses, minimising volatility in business numbers. After witnessing high saving rates during the pandemic, 2021-22 saw spending increase dramatically, as many consumers exited the pandemic with high discretionary income. This fostered business creation, leading to a 5.3% increase in total business numbers in 2021-22 alone. In 2022-23 and 2023-24, inflation crippled the economy. High interest rates have made loans less affordable, which limited entrepreneurs' capacity to embark on new business ventures and stunted the growth of new enterprises. Despite this trend, business numbers continued to grow, as GDP growth and growing household consumption expenditure supported new business. An easing in the cash rate in recent years, on the back of inflation coming within targeted 1-3% range, has provided more opportunities for business growth. Overall, IBISWorld forecasts the number of businesses to grow at a compound annual rate of 2.7% over the five years through 2025-26.