Have your plan B ready, ANZ NZ CEO Antonia Watson urged businesses as the shaky ground beneath the US and Iran ceasefire begins to give way to fresh volatility in the Strait of Hormuz.
"Watch, worry and wait, is really where we're thinking at the moment," Watson said.
Talking to New Zealand media from ANZ Singapore as part of Prime Minister Christopher Luxon's business delegation at the Singapore-New Zealand Leadership Forum, Watson said being prepared was essential.
Watson's warning drives home the underlying message from the forum - first put bluntly by Singapore PM Lawrence Wong's opening comments on Monday, who said the shocks spurring from the Middle East crisis "remind us that perhaps, such shocks are no longer one-off - they are becoming part of the new normal in our business environment".
"We cannot assume that markets will always function as before. We have to diversify, de-risk, and build resilience into our systems."
The potential looming economic fallout from the Middle East crisis remained a constant talking point across the political and business delegation, with the trip's end coinciding with military escalations from both sides in the Strait of Hormuz - US President Donald Trump warning Iran forces would be “blown off the face of the Earth” should it target the US.
Watson said a discussion over the last two days of the trip was, "in all these scenarios, what are we going to do, and how is it going to help?"
"One of the things that we were talking about over the last day or so was, what are people's Plan B?"
Some businesses, especially those unable to pass costs on, were facing significant impacts.
Watson said ANZ customer spend numbers had a 30% increase in petrol in March, with less spent on discretionary items.
"There are real impacts flowing through and… the sooner this crisis is over, the better, but equally, the more we can do to make ourselves more diverse in terms of who our partners are globally.
"Partnerships like we've just announced with Singapore, that’s great," Watson said, referring to the Agreement on Trade in Essential Supplies (AOTES), which ensures New Zealand and Singapore keep trading essential goods during crises and when supply chains are disrupted, meaning no export restrictions would be put in place.
Watson's remarks were made just prior to an ANZ hosted roundtable on supply chain disruption, with the likes of Zespri, Comvita, New Zealand Trade and Enterprise and the Ministry of Primary Industries in attendance. Swire, Aon and Toll Holdings had also come to the roundtable.
“The plan is to have a very constructive and open conversation about how we can do things better, how we make sure the supply chain isn’t overtly impacted by what’s going on at the moment," Watson said.
"The Middle East crisis has probably brought it to a head... it seemed like a really relevant topic to bring people together on."
Luxon said at the roundtable's opening there was a need to have a “braver” conversation around medium to long term structural reform and to talk about the crisis in regards to what they were seeing in costs and logistics.
After the roundtable, Luxon said they spoke about what they can do over the next 15 years to improve supply chain efficiency, “so that we can continue to actually grow our economy and get our exports to market all around the world”.
Asked if he was starting to get a picture about the costs businesses were facing because of the crisis, Luxon said; "it's completely different by market and it's completely different about where source of origin is coming... so it's not possible to get a nationally aggregated picture at all around that".
"Suffice to say, it's a no-brainer that when you've got higher fuel costs, you've obviously got higher input costs, and that's why we've been saying we want to mitigate and minimize the impact."
On who was facing it the worst, Luxon said, "it's generally different by different sectors... from day one, we've been tracking our top, key critical inputs".
"Think about urea, think about plastics and other petrochemical inputs into New Zealand. And we've getting a good supply of that."
*Anna Whyte is reporting from Singapore for Interest.co.nz, with funding support from the Asia New Zealand Foundation.
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