Some recent economic development trends

Infometrics was proud to sponsor the recent Economic Development New Zealand (EDNZ) 2025 Annual Conference, with a focus on “Local Strength, Global Reach”. As part of the conference, we shared an economic update and some analysis of key trends that the Infometrics team has noticed emerging as influential focus areas for economic development over the last year.

In this article, we briefly recap some of the trends discussed at the EDNZ Conference, including the limited funding available for economic development, the focus on traded activities in local areas, and the importance of understanding anchor employers.

Economic development across New Zealand is approached in numerous ways, from local or regional economic development agencies funded by local councils, or councils undertaking this function directly, to independent organisations funded by prior community asset funds, through to business-funded organisations.

Although by no means perfect, Infometrics analysis of total council funding for economic development does provide some insight into current spending trends. Total council spending on economic development operating expenditure totalled $294m in 2024 – the latest data available. Although economic development funding has increased over time, growth has been far slower than growth in total council operating spending,

As a result, economic development spending has fallen to 1.9% of total council operating spending in 2024, the smallest proportion ever (since at least 2009, when data is available from – see Chart 1).

On average since 2009, economic development spending has averaged 2.3% of total council operating spending.

Overall, spending on economic development is a very small part of overall spending by councils, and with a relative fall in spending levels over time, economic development practitioners are needing to do more with relatively less.

There has been more focus on supporting and retaining local businesses, and attracting new businesses into local areas recently.

Recent analysis for the Wellington Chamber of Commerce, undertaken in partnership with Infometrics and Allen + Clarke, highlighted some of the important trends that can influence business attraction and retention decisions.

The Infometrics Business Attractiveness Index includes a variety of factors that can determine the opportunities or challenges for a business to operate in a certain area, including access to skilled labour, wage rates, housing and rental affordability, household incomes for local residents, commercial property values, rates and other running costs, and more.

In Wellington City, the highest commercial rates in the country and relatively high per-area commercial property costs were challenges for businesses. However, access to a highly skilled workforce, and a relatively more affordable development contributions requirement relative to other key metro areas, were advantages for the capital.

Recent times have seen an increasing number of announcements around closures, downgrades, and consolidations across some key industries, as reshaped cost structures and more challenging economic times hit. These announcements often hit local economies hard, as often the announcements are made by a larger employer in the area, that has a larger influence on the local economy.

We have previously analysed concerns around industry concentrations and anchor industries, and it’s clear that challenges still remain. Some areas are more exposed than others to having a larger indirect economic response if a key local employer announces a change.

In some parts of New Zealand anchor employers are more important, and noticeable, than others. Although there isn’t a comprehensive public list of businesses in New Zealand by employee count (for privacy reasons), Infometrics analysis of businesses by employee size bands provides some insight into possible key employer concentrations.

Across the country, in 2024, there were 0.5% of total business units that employed over 100 employees (just over 3,200 in total). A small proportion overall, but with a more mixed distribution across areas.

In 2024, 15 of 66 mainland territorial authorities had a large business concentration above the national average. A number were cities and metro areas, with Palmerston North, Hamilton, and Wellington ranking at the top of the list, with a number of other cities up above the national average – see Chart 2. In a sense, having higher large business concentrations in big cities isn’t usual, nor as great of a concern. The large size of metro areas generally ensures that economic anchors are more dispersed.

But in smaller areas, these economic anchors become more noticeable. For example, areas like Kawerau, Grey, Hastings, and Opotiki – which all have large business concentrations above the national average – changes to large anchor employers could have a larger impact.

In recent years there has been a much greater interest in understanding the traded part of local economies, to understand the opportunities for new or enhanced traded goods and services, and to understand vulnerabilities to economic changes outside a local area.

Infometrics analysis on the Tairāwhiti Gisborne local economy last year showed that the tradeable sector accounts for between 22-32% of the Tairāwhiti economy with a central estimate of 27%, compared to 21% of the national economy. This estimate takes into account not only exports to overseas, but also trade with other parts of New Zealand.

Understanding the economic contribution of an event, attraction, asset, or similar is fairly important to help decide, or evaluate, what actual impact something has had to a local economy. At Infometrics, we continue to see a lot of interest in understanding local contributions, but also the importance of benchmarking these contributions, and putting them in context.

Sometimes, the purported numbers expected to be supported by a particular event or attraction appears impressive at first glance. But benchmarking these figures against other comparators, like similar events or attractions in other areas, or relative to current tourism numbers, can provide vital context. Supporting 100,000 visitors to an area over a year might sound impressive, but if an area only gets 70,000 visitors a year, or a similar sculpture only receives 35,000 visits a year in a more populous part of the country, that 100,000 figure is rightly undermined quickly.

As part of our regular economic monitoring, we also keep a bit of an eye on different attendance and event figures to ensure some common-sense benchmarking can be applied. In recent times, this monitoring has highlighted higher patronage of Wellington Zoo, up 10% on average over the last three years compared to the three years pre-pandemic as families have sought low cost, close to home activities. At the same time, lower international visitor numbers than pre-pandemic and lower domestic traveller numbers have contributed to a 19% drop in Sky Tower attendance over the same period.

Economic development efforts across New Zealand are being reshaped by tighter funding, shifting business dynamics, and the growing need for evidence-based decision-making. Council spending on economic development has slipped to its lowest share on record, meaning practitioners must deliver more with comparatively fewer resources. At the same time, the focus on business attraction and retention is sharpening. Smaller regions remain especially vulnerable to shocks from changes at major anchor employers, underlining the importance of monitoring industry concentration. A deeper understanding of traded activities is also helping regions identify opportunities and risks linked to external economic forces. Finally, growing demand for robust evaluation of events and attractions highlights the need for realistic benchmarking to ensure that projected economic contributions align with local context and comparable experiences elsewhere.