Realistic Growth

Realistic Growth

As we look to achieve growth, are we being realistic?

Realistic Growth

92% of New Zealand CEO’s have confidence in global growth, as compared to a global average of 67%. However, there is a general lack of confidence as to how much of this will translate into growth in the New Zealand economy, with only 64% of New Zealand CEO’s expressing confidence in our outlook for the next three years.

See the full KPMG New Zealand CEO Outlook Survey

Recently released GDP numbers support this, with suggestions that the economy has lost some of its momentum in the March quarter. New Zealand CEOs expectations of growth within their own organisations have also reduced since the last survey, with most now forecasting less than 2% top line revenue growth over the next three years. This is a significant change since last year’s survey.

The survey highlights a return to territorialism as the greatest threat to growth, with nearly two thirds of New Zealand CEOs identifying this threat. Whilst this was mirrored globally to a lesser degree, New Zealand’s reliance on export led growth perhaps underpins why there is nervousness about how we share in global growth, particularly if there is a trade war between the US and China.

Cyber security and environmental/climate change were also identified as key risks to growth. Only 32% of New Zealand CEO’s see their organisations as well placed overall to withstand a cyber attack, when compared to their global counterparts (at just over 50%). Difficulty with sharing information securely with third parties was also perceived to be a barrier to extracting value from networks of third parties by a third of New Zealand CEO’s, much higher than the global average.

64% of CEO’s perceive that growth over the next three years will be harder earned than ever before, more than double the global average. The challenge of moving toward an agile business model and linking the growth strategy to wider societal purpose were two themes which underpinned the responses to this question. Increased interest in integrated reporting across a number of leading New Zealand corporates is a positive step toward the challenge of dealing with the latter issue.

New Zealand’s CEO’s are conscious of the need to respond to change by fostering innovation and building agility but are equally conscious that the ability to achieve growth at scale in the domestic market is limited. Accordingly the combination of the domestic and global outlook means New Zealand’s CEOs are now looking for “realistic growth”.

Despite the rather sombre survey results, there are many positive stories in the New Zealand economy to be celebrated. The survey highlights that we are perhaps at a point of having to reconsider where we fit globally and how best to respond to the rate of change in technology and society.

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