New Zealand's tech products and services are expected to outperform the rest of the economy over the next few years leading to a slowdown in overall employment growth.
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A report, by global financial services group Western Union, is forecasting the economy to grow by nearly a quarter (23 percent) in the next eight years, with a shift away from basic production to services.
The report says faster digitalisation could result in fewer jobs in some sectors, such as retail wholesale and manufacturing and more in information & technology (IT) services.
Western Union Business Solutions Asia Pacific region currency strategist Steven Dooley said New Zealand was an outlier in the region with technology leading the economic growth.
"It is quite unique. New Zealand seems really well primed for growth in those technology sectors and it's something that we've seen as quite different to some of the other regions that we've looked at," Dooley said.
The report expects the expansion of services and technology sectors to cut into the labour market, with fewer jobs over time.
"Contrary to 2008-09 financial crisis, Covid-19 expected to cause higher economic damage in the short run, and also very likely influence long-run trends too," the report says.
"Employment growth certainly seems to lag that earnings growth so digitalisation in general really is driving an increase in earnings, but a slowdown in employment growth as well," Dooley said, with primary industries and manufacturing most affected.
Electronic components were expected to grow by 52 percent in the 2029 growth forecasts, with medical and surgical equipment close behind at 47 percent.
IT services and telecommunications services were expected to grow by a third, along with furniture manufacturing and publishing and broadcasting services.
The report says the growth in business to business services (B2B) would outpace the global trade, with the faster outsourcing of legal, financial and payroll services.
"Deliverable B2B, ICT (information, communication and technology) and financial services should contribute an outsized share of growth in services trade, or 62 percent of the expected $US1.9 trillion increase in the value of overall services (global) trade between 2019 and 2025."
New Zealand's manufacturing, agricultural, forestry and fisheries will grow slower than the overall economy, along with accommodation and catering, although food and agricultural technology sectors were expected to grow 27 percent.
The only drags on New Zealand's economic growth were oil and natural gas products and services, which were expected to show negative growth over the next eight years ending 2029.
