New Zealand's business confidence in the fourth quarter of 2020 was at its lowest since 1974, as businesses struggle with rising interest rates, ballooning costs, and weaker demand, according to a survey by a local think-tank.
According to the survey by the New Zealand Institute of Economic Research's (NZIER), net 70% of firms surveyed said they expect general business conditions to worsen – a sharp increase from 42% in the previous quarter. The survey also said that business confidence is now at its lowest since 1974, and on a seasonally adjusted basis, it is the weakest since the survey started in 1970.
A net 81% of companies reported increased business costs in the final quarter of 2022, while 9% said that they are looking to reduce their staff numbers in response to the business climate.
Business activity is also slowing down, with 13% of businesses reporting a decline in activity over the past quarter. According to NZIER, this was the weakest since the June 2020 survey, when the full impact of the first COVID-19 lockdown was captured.
The building (77%) and retail sectors (76%) were the most pessimistic about the economy, with many of them much more cautious in their operations.
“Despite a greater proportion of businesses passing higher costs on by increasing their prices, profitability has weakened,” the report said. “Nonetheless, the pick-up in costs and prices points to high inflation persisting into 2023.”
