New Zealand’s economy isn’t growing the way it should - and the question on everyone’s mind is whether infrastructure is the answer. In this episode, Kiwibank Chief Economist Jarrod Kerr unpacks why our current settings are holding us back and how smarter long-term investment could shift the economy onto a stronger footing.
Jarrod Kerr believes the biggest drag on productivity is simple: a long-term lack of infrastructure investment. Had New Zealand kept up with roads, ports, public transport, and export pathways, the economy would be “much larger, harder, faster, and more resilient.”
Alongside infrastructure, he notes that education, technology adoption and health all contribute to a more productive and competitive economy.
A major barrier to growth is New Zealand’s three-year election cycle. Jarrod argues that transformational infrastructure projects can’t be built on political timelines – they require long-horizon planning similar to the NZ Super Fund model.
He highlights that for every $1 invested in infrastructure, New Zealand gets more than $1.50 back in economic activity. Cutting CapEx alongside operational spend, he says, was a missed opportunity.
New Zealand’s economy relies heavily on exporting – yet we face slow ports, fragile transport links, and uncertainty around future investment.
Questions raised in the episode include:
Where should our major port be?
How do we move goods efficiently across the country?
Are we overdue for private sector involvement in funding major infrastructure?
These pressure points reinforce why NZ’s economy isn’t growing, especially when compared with countries like Australia that “just seem to get things done.”
The conversation highlights a two-speed economy:
South Island dairy regions (especially Canterbury) have larger farms, lower debt and stronger spending, helping their local economies.
North Island regions like Waikato carry higher farm debt, meaning payouts flow into loan repayments rather than communities.
Auckland and Wellington remain sluggish with weak sentiment and limited momentum.
These differences help explain why NZ’s economy isn’t growing evenly across the country.
Jarrod pushes back on the idea that dairy and horticulture are “unproductive.”
He says New Zealand is “bloody good” at agriculture and should celebrate it – but the other 90% of the economy also needs attention.
Opportunities he mentions:
Manufacturing
Service industries (70% of the economy)
High-growth export niches like pet food and natural products
These industries are thriving thanks to the Kiwi brand, which has strong global pull.
At a recent EU summit, Jarrod was reminded just how powerful New Zealand’s brand is overseas.
European ambassadors described New Zealand products as high-quality and desirable – a major advantage when attracting trade and foreign capital.
However, he notes that our capital markets remain shallow, and we could do more to attract investment from overseas.
Jarrod believes the key missing link is household confidence.
If interest rates keep falling and households feel less financial pressure, he expects:
GDP growth of 1-2% next year
House prices rising 3-4%
Unemployment peaking, then easing
Consumer confidence improving
Businesses feeling more optimistic
He describes the cash rate falling below 3% as the “circuit breaker” the economy has needed.
NZ’s low growth is heavily linked to decades of under-investment in infrastructure.
For every $1 spent on infrastructure, NZ gains more than $1.50 in economic activity.
Export bottlenecks and slow project delivery continue to drag productivity.
Regional economies are diverging, with the South Island outperforming.
Agriculture remains highly productive – but diversification is essential.
The Kiwi brand is a global advantage and a major opportunity for exporters.
Lower interest rates and higher household confidence are crucial for recovery.
If you’d like to learn more, check out these other episodes below.
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