Businesses believe it'll get gloomier
LOIS CAIRNSIncreasing numbers of businesses are losing confidence in the economy.
Even though the country avoided a double-dip recession last week, the results of a Horizon Poll out today show a majority of business people believe the economy will decline further this year.
More than half of business proprietors, managers and executives think things will get worse for the economy, and in what could be bad news for the government, those who most expect economic decline voted National and Act in 2008.
Horizon's weighted survey polled 2221 people nationwide between March 12 and 23. It found 17% expect the economy to grow in the coming year, 41% expect it to decline, 24% think it will be about the same, and 12.3% don't know.
Official figures released on March 24 show New Zealand's gross domestic product grew 0.2% in the three months ending December 31, narrowly avoiding a double-dip recession.
But after February 22's devastating Christchurch earthquake, the latest Horizon survey, with a margin of error of 2.1%, shows increasing numbers of people think there will be more decline than growth.
Among those making purchasing decisions for their organisations valued at $100,000 or more, 54% think there will be decline. Those in manufacturing are the most pessimistic, with 66% expecting a decline, followed by 55.5% in property and business services, and 52.5% in the building industry.
Among senior decision makers, half of business proprietors and the self-employed expect decline, while 21.6% expect growth. Business managers and executives are equally gloomy, again with half expecting decline against 21.4% for growth, while half of professionals and senior government officials also think the economy will contract rather than grow.
Among party voters, 49% of National's 2008 supporters think there will be decline while one in five favours growth. The results for other parties in the governing coalition were equally pessimistic, with half of the Act supporters fearing a dip. It was the same with United Future voters.
However, Maori Party voters were slightly more optimistic with only a third of them pessimistic, with 25% optimistic.
The Greens are the least gloomy, with only 30% expecting decline. Of Labour voters, 37% expect decline and it was similar for New Zealand First supporters, at 36%.BNZ chief economist Tony Alexander said the results were not at all surprising and were in line with his own research. The Christchurch and Japanese quakes had created a high degree of uncertainty and until the impacts of those two events became clearer, confidence in the economy would remain low.
"The economy was very weak last year and there was no sign of growth accelerating, even before February 22. Basically I think a lot of people who have been waiting for the economy to show faster growth have been disappointed for all the last year and that has made consumers and business people just a bit more cautious about forecasts of things getting better."
Alexander said it would take time for confidence levels to pick up and there were no quick fixes in the wind.
"It's all about passage of time," he said. "There is no accelerating this, time will bring improving economic conditions."
Things like the recent cut in interest rates, the filming of The Hobbit movie, and the looming Rugby World Cup should result in stronger economic growth in the second half of this year, with quite fast growth predicted in 2012 as the rebuilding of Christchurch moved into full swing.
- Sunday Star Times
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