6 Oct 2015

Business confidence drops to five-year low

2:13 pm on 6 October 2015

Business confidence has fallen to its lowest level in nearly five years, with slowing economic growth at home and in key overseas markets weighing on sentiment.

Business confidence declining generic graphic

Photo: 123rf.com

The Institute of Economic Research's closely-followed survey of business opinion shows a net nine percent of firms in the three months to September expected the economy to worsen during the next few months - the lowest level since March 2011.

However the institute's senior economist Christina Leung said businesses weren't yet feeling the pinch and so were upbeat about their own outlook.

Ms Leung said business confidence had been dented by slowing growth in China, and what that means for New Zealand exports, and also the potential for a drought later this year - but while that had clearly had an effect, overall business wasn't too despondent.

"So businesses are feeling fairly uneasy about the New Zealand economy more generally, but when it comes to demand for their own business, that's actually holding up fairly well."

Ms Leung said the survey also shows inflation pressures at their weakest in more than 25 years, which will allow the Reserve Bank to cut its official cash rate once more before the end of the year.

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