New Zealand faces 30-year wait for GDP to double, OECD warns

New projections from the OECD indicate that New Zealand's economy is set to take more than 30 years to double in size, unless there are substantial changes in the way organisations operate.

The OECD's latest modelling places New Zealand's real GDP at USD $216 billion, projecting that this figure will not double until 2055. Economic growth of nearly 48% by 2040 is anticipated; however, much of this is attributed to population increases and greater labour input, rather than meaningful productivity improvements.

GDP per hour worked in New Zealand is now, on average, 40% lower than Scandinavian countries such as Denmark, Finland and Sweden. According to the OECD, this sustained underperformance has led to a widening gap not only in economic output, but also in living standards, wage potential and long-term competitiveness.

Productivity challenge

Experts warn that rapid advances in artificial intelligence (AI) and automation, while potentially beneficial, will not be enough by themselves to address these entrenched productivity challenges. They point out that without adjustments to organisational leadership and structural methods, technology alone will not deliver significant productivity growth and may even reinforce existing inefficiencies.

"There's a misguided belief that AI will close the gap for any organisation that applies it. But what we've seen is that when organisations adopt technology without modernising their leadership and culture, the gains they were seeking rarely occur

According to Craig Steel, a workplace performance expert from Vantaset and author of Transforming New Zealand's Productivity, relying on AI to close the productivity gap is misguided. He explained:

"If AI is layered on top of disconnected leadership models and compliance-based systems, it won't lift people, it will marginalise them," he says.

Steel cautioned that New Zealand could become a two-speed economy, with digitally advanced sectors forging ahead while traditional industries risk falling further behind.

"AI will benefit some industries more than others. High-tech services, finance and digital commerce are naturally positioned to leverage AI quickly. But for our traditional sectors like construction, agriculture, tourism and logistics, the path to impact is slower, more convoluted and more dependent on leadership clarity and workforce capability."

He added that the unequal rate of digital adoption is already evident, with technology-focused organisations gaining momentum while labour-intensive sectors struggle to adapt. He said:

"You're seeing early gains in digitally native firms that have agile structures and strong investment in talent. Meanwhile, labour-intensive sectors are struggling to adapt their business models, and without support, they'll be left behind."

Steel identified the country's core issue as a deficit of modern systems and leadership, rather than a lack of technology itself.

"Despite the hype, AI's promise of efficiency is often delayed by years of integration, upskilling and business model adaptation. In New Zealand, many small and mid-sized firms lack the scale or leadership frameworks to carry that burden effectively.

"OECD research shows that digital adoption only translates to higher productivity when it's coupled with managerial capability, workforce training and capital investment. New Zealand firms consistently underperform in all three. Without a cultural and strategic reset, AI risks becoming just another cost with limited return," he says.

Steel stressed that technology should support human capability rather than merely replace it, stating:

"The opportunity with AI isn't automation for its own sake, it's augmentation - giving people better tools so they can make a bigger difference."

He noted that the strongest performance is delivered by organisations that align five interdependent drivers: strategy, culture, leadership, capability and performance management. According to Steel, failure to align these elements is the main reason organisations struggle, not a lack of technology or data. He said:

"Regardless of industry, when people understand the strategy, see how they contribute, and are trusted to make decisions, performance improves. That doesn't happen by accident; it happens by design.

"New Zealand businesses are at a crossroads. The current economic environment, shaped by global volatility, rapid technological disruption, and the changing nature of work, demands an entirely new approach to organisational performance."

A sporting perspective

Darren Shand, former All Blacks Manager and now delivery partner to Vantaset, drew comparisons between high-performing sports teams and business performance. He emphasised the importance of systems, clarity and trust within organisations.

"The All Blacks didn't win because of tools. They won because of belief, clarity and discipline.

"Every player knew their role, how they contributed and how to excel under pressure. That same clarity is missing from many organisations right now."

Shand commented on the necessity of having purpose and feedback systems, saying:

"A factory floor is no different from a forward pack. If you have great individuals but no connection to purpose or feedback loops, performance breaks down. AI won't fix that - systems, leadership and culture will."

The OECD has also warned of the risk posed by factors such as rising energy costs, limited research and development spending, and disjointed digital leadership, all of which may undermine New Zealand's competitiveness as other countries increase their investment in integrated performance systems.

Shand stated that AI should be reframed to support effective decision-making and organisational clarity:

"You can't fix a performance problem by swapping people for algorithms. You fix it by creating an environment where AI supports human decision-making, where strategy is clear and where people are trusted to lead."

He concluded with a message drawn from elite sport:

"In rugby, if you're behind on the scoreboard, you don't wait for momentum to shift. You change tactics. That's what New Zealand needs now. A new playbook, not just a new platform", he says.