Business confidence has slumped with firms negative about their own prospects for the first time in a decade.
The ANZ Business Outlook for August shows a net 52 percent of businesses expect conditions to deteriorate in the year ahead, from 44 percent last month.
It is the lowest headline reading in 11 years.
Individual businesses have turned negative about their own outlook for the first time since April 2009, with a net 1 percent pessimism level.
"Employment, investment and export intentions all fell to dismal levels, along with profit expectations," ANZ chief economist Sharon Zollner said.
She said the economy had positives but they seemed to be ignored.
"The outlook for the economy appears to be deteriorating further, with firms extremely downbeat despite easier monetary conditions, fairly robust commodity prices, and positive population growth.
"Whatever the cause, the risk is rising that it becomes self-fulfilling," Ms Zollner said.
The survey's indicators pointed to firms not just halting hiring but cutting staff, as well as costs by not investing.
That has prompted central banks in developed economies, including the Reserve Bank of New Zealand, to cut interest rates to their lowest levels since the global financial crisis in attempts to bolster demand and activity.