Total capital expenditure

IBISWorld forecasts total capital expenditure to inch upwards by 0.1% in 2025-26, to $69.1 billion. This strengthening follows expenditure drops in the previous financial year, stemming from slumps in both the private and public sectors. This trend is expected to continue for private sector capital expenditure, which is projected to contract by 0.6% in 2025-26, but will reverse in the public sector, expanding by 2.2%. The reduced spending from private sources will come about through constrained spending in construction, as labour and materials costs continue to constrict profit margins, disincentivising investment in the sector despite rising property prices.

Total capital expenditure typically increases over the long term due to population growth and expansion in national GDP. Private capital expenditure accounts for the majority of overall capital expenditure, on average, representing between 70% and 80% of total capital expenditure. However, this ratio has inched downwards recently, falling from a 10-year average of 75.9% to the five-year average of 74.6%. Capital expenditure by the public sector has been swelling over the past decade. Similar to private capital expenditure, public sector capital expenditure typically rises over the long term, likewise a flow-on effect of population and GDP growth. Natural disaster recovery efforts aimed at repairing damaged or destroyed infrastructure can also spur growth in public sector capital expenditure.

Investments to help the economy recover from the pandemic have also led to growth in public capital expenditure over the past five years, a trend that has resulted in the New Zealand Government (Te Kawanatanga o Aotearoa) announcing plans to scale back capital expenditure. Overall, IBISWorld forecasts total capital expenditure to inch upwards at a compound annual rate of 1.2% over the five years through 2025-26.