Acting Prime Minister Winston Peters is dismissing new weak business confidence figures, saying he forecast the drop on the night he chose the Coalition Government.
The latest business confidence figures from the New Zealand Institute of Economic Research (NZIER) show the number of firms expecting economic conditions to deteriorate in the second half of the year has almost doubled.
A net 19% of businesses expect a deterioration in economic conditions – more pessimistic than the 10% in the previous quarter.
This is the lowest level since 2011.
The NZIER Quarterly Survey of Business Opinion (QSBO) comes just days after ANZ’s monthly survey of firms’ optimism, which showed a net 39% of businesses are pessimistic about the year ahead – up 12 points from May.
National was quick to slam the Government for letting the numbers get this bad.
“It’s pretty damning,” opposition leader Simon Bridges told media on Tuesday.
National’s finance spokeswoman Amy Adams says the numbers aren’t surprising, given the Government has introduced “a range of anti-growth measures.”
She says these include industrial relations reforms, hiking fuel taxes, shutting down oil and gas, and lower investment in state highway networks.
When asked for his reaction to the numbers, Peters did not seem surprised to hear firms are becoming more pessimistic.
“I forecast that on the October evening when we were going to go for not a modified status quo, but a real change,” he says, referencing the night he chose to go into coalition with the Labour Party.
At the time, Peters gave a grim outlook for the economy saying there were “dark clouds ahead.”
He also blames businesses for the drop in confidence levels, saying “it’s not so much a perception, so much as it is an inbuilt bias of a minority of New Zealanders,” as business has lower confidence under the last Labour Government even when GDP growth was high.
Associate Finance Minister David Parker, who has previously referred to ANZ’s numbers as “junk,” is blaming the drop in business confidence on perception.
“Surveys of people’s opinion as to whether they like the Government is different to investment intentions and I think investment intention surveys are more reliable than essentially polling people’s political preference.”
The NZIER survey shows investment intentions have declined – particularly for investment in new buildings, with a net 4% intending to reduce this type of investment.
The NZIER data shows although views on their own trading activity – a good indicator of economic growth – remain more positive, trading activity in the June quarter still softened.
The proportion of businesses reporting higher demand decreased from 15% to 7%.
“Firms’ expectations of future demand also eased, with fewer businesses expecting improved demand over the next quarter. These developments point to softer economic growth in the second half of 2018,” NZIER principal economist Christina Leung says.
Weak profitability was a concern across most sectors, especially in the building sector.
“Furthermore, building sector firms are no longer optimistic about a rebound in profitability, with 14% expecting profitability to worsen in the next quarter.”