Data shows business stress has peaked, but risks remain amid global uncertainty

New Zealand’s business landscape is currently navigating a period of significant volatility, marked by a rise in company liquidations and shifting sector-specific insolvency trends. While the total number of business closures reached a 15-year high last year, recent data suggests that the pressures facing local firms are largely rooted in external global shocks rather than internal economic failures.

Drivers of Market Instability

The current climate of uncertainty is being fueled by an international environment characterized by elevated input costs and heightened supply-side risks. These global factors have contributed to a persistent caution regarding spending, which has, in turn, triggered a decline in consumer confidence and a cooling of overall demand.

Did You Know? Last year, New Zealand recorded 2,867 company liquidations, marking the highest volume of business closures in 15 years according to data from the Ministry of Business, Innovation and Employment.

The Inland Revenue Department has further impacted the liquidation landscape by intensifying its debt enforcement efforts. Over the past few years, the department has ramped up its activity, pushing through 893 winding-up applications last year, compared to 702 in 2024.

Sector Performance and Vulnerabilities

While some sectors have seen a recent reprieve, others remain under intense pressure. Food and beverage insolvencies fell by 36% in the first quarter of the year compared to the previous quarter, though they remain 31% higher than at the same time last year. Similarly, retail trade insolvencies dropped from 95 in the final quarter of 2025 to 43 in the first quarter of this year.

Expert Insight

Conversely, the construction sector continues to struggle, recording the highest number of insolvencies by volume. Cases in this sector rose to 215 in the first quarter, up from 201 in the previous quarter.

Expert Insight: The persistence of “lean balance sheets” following the Covid-19 pandemic leaves many businesses in a fragile state. As these companies manage outstanding obligations to the Inland Revenue, the transition from debt management to liquidation may become an increasingly common outcome for those unable to satisfy demands.

Future Outlook

The months ahead may prove challenging for consumer-dependent businesses as the onset of winter is expected to amplify the consequences of global instability. Businesses relying heavily on discretionary spending are likely to face a significant drop in demand, potentially exacerbating the current insolvency trends.

While analysts suggest that relief could be felt quickly once offshore conditions stabilize, a return to full normality is expected to be a gradual process. As prices and supply chains rebalance, the pace of recovery will likely depend on how effectively businesses can navigate these lingering external pressures.

Frequently Asked Questions

Why are company liquidations rising in New Zealand?

Rising liquidations are attributed to a combination of external global shocks, elevated input costs and supply-side risks. The Inland Revenue Department has significantly increased its debt enforcement work, leading to a higher number of winding-up applications.

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Which sector has the highest number of insolvencies?

The construction sector currently records the highest number of insolvencies by volume, with 215 cases reported in the first quarter of the year.

What is the outlook for consumer-facing businesses?

Consumer-dependent businesses remain vulnerable, particularly those reliant on discretionary spending. The onset of winter is expected to amplify the impact of international instability, likely leading to a significant drop in demand for these sectors.

How do you believe local businesses can best adapt to these ongoing global economic shifts?