The Northern Employers & Manufacturers Association says the Government needs to focus on research and development to boost the economy.
Chief executive Alasdair Thompson, backs six initiatives the Prime Minister outlined on Wednesday to tackle underlying weaknesses in the economy.
He told Morning Report that innovation is critical to increasing New Zealand's productivity and the private sector has to play its part in driving research and development.
Mr Thompson said there are signals of a slight turnaround in the economy, although growth in the next year will be modest.
