NZ economy in deep per capita recession as investor confidence slumps

There are many funds and ETFs that can help spread your wealth for even the smallest investors, in a very cost-effective way, writes Mark Lister. Photo / 123rf

• ASB’s investor confidence survey shows optimism at its lowest since the pandemic, with high concerns in April.
• The economy has contracted per capita for nine of the past 12 quarters, indicating a lengthy recession.
• Local investments have lagged behind international markets, highlighting the need for global diversification.

The latest quarterly investor confidence survey from ASB has got a lot of attention in recent days, with media reports noting that optimism was at its lowest ebb since the pandemic.

This survey covered the June quarter, and the ASB team pointed out that concerns were very high around April, near the beginning of the survey period.

That’s understandable, given the trade tensions and tariff uncertainty that were prevalent then.

The other piece of negative news we got last week was the GDP report, which also covered the June quarter.

It was much weaker than expected and offered further evidence that we have faced a very challenging period.

The economy has contracted (on a per capita basis) for nine of the past 12 quarters, making for a deep and lengthy recession.

This has inevitably weighed on the performance of local investments, and contributed to some of the pessimism.

Other countries have had a much better time of it, and there have been some excellent opportunities for strong investment returns of late.

They just haven’t been here in Aotearoa.

This really highlights the need to ensure your investments are globally diversified.

If you haven’t done that, and have instead hunkered down in New Zealand assets, you’ve left a huge amount on the table.

The NZX 50 sharemarket index is up a marginal 0.2% in 2025, only barely in positive territory.

National house prices are down 0.9% this year, having declined for seven of the past nine months. Photo / 123rf

The housing market has been even weaker.

National prices are down 0.9% this year, having declined for seven of the past nine months.

Domestic fixed income has performed better, with the NZX Corporate Bond Index up about 5% this year.

One segment of the local investment landscape that’s had a great run in 2025 is listed property.

The NZX index that represents our largest listed commercial landlords is up more than 15% this year.

That’s a welcome recovery, with the sector flatlining in the previous five years.

Let’s hope that’s an early sign that confidence is returning to the broader commercial property sector, and that 2026 will be a brighter year than the past few have been.

Most of those returns are mediocre, to be honest, especially when we compare them to international assets.

World shares are up 17.8% so far this year, with the dominant US market having returned 14.4%.

Emerging market equities (for which China is the biggest constituent) have rallied an impressive 23.9%, the UK is up 16.2% and Europe is 12.7% higher.

Japanese shares are up 13.6%, while the Australian market has gained 11.0%.

Currency moves push some of those numbers around, and the pecking order changes quite a bit.

The NZ dollar is up almost 5% against a softer greenback, reducing the return from US shares to just below 10% and emerging market shares (which are benchmarked in US dollars) to 18.2%.

However, our currency has fallen almost 8% against the euro and 3% against the British pound.

That boosts the return from those two regions to 22.4 and 19.6%.

All these numbers include dividends so they’re consistent with how our NZX 50 index is calculated.

Whether it’s houses or shares that spin your wheels, the lesson has been the same so far.

If you had too much (or worse still, all) of your investable capital in local assets, you did yourself a disservice.

Even if you correctly picked that New Zealand assets would languish and chose to keep your powder dry in cash or bank deposits, you still missed out.

New Zealand won’t always be a laggard, even though we’ve had a few lean years.

In the decade leading up to the pandemic local shares outperformed international markets on seven out of 10 occasions.

However, we’ve really fallen behind since then.

As workers, homeowners and small business owners, there’s not much we can do but stick it out and hope for things to improve.

Investors don’t face those same constraints, and it’s never been cheaper or easier to spread your wealth across greener pastures.

There are many funds and ETFs that can help achieve this for even the smallest investors, in a very cost-effective way.

We live in a great country and we all hope there’s a more prosperous period ahead, but there’s no need to be “all in”.

The mobility of your capital means the world is your oyster and investors should take advantage of that.

Mark Lister is Investment Director at Craigs Investment Partners. The information in this article is provided for information only, is intended to be general in nature, and does not take into account your financial situation, objectives, goals, or risk tolerance. Before making any investment decision Craigs Investment Partners recommends you contact an investment adviser.