27 Feb 2020

Business confidence drops amid coronavirus disruption

2:03 pm on 27 February 2020

Business confidence has fallen amid fears of the impact of the Covid-19 coronavirus on the economy.

Business confidence declining generic graphic

Business confidence dropped six points in February. Photo: 123rf.com

The ANZ survey for February shows a net 19 percent of businesses expect general conditions to worsen in the year ahead, from last month's 13 percent pessimism level.

The more closely followed individual business outlook has fallen to 12 percent optimism from 17 percent.

ANZ chief economist Sharon Zollner said responses after the virus headlines became more prominent were more negative.

"The COVID-19 outbreak in China appears to be causing widespread alarm about the outlook for both the New Zealand economy and firms' specific prospects."

Read more about the Covid-19 coronavirus:

Zollner said the New Year lift in optimism has been hit by the virus, with companies expecting to invest less, hire fewer staff, and export less, with more expecting their profits to fall.

"As the news comes in we're getting more and more concerned... our best hope is that the disruption proves short-lived, but there's no question the export-oriented economy is reeling."

ANZ chief economist Sharon Zollner.

ANZ chief economist Sharon Zollner Photo: RNZ / DOM THOMAS

The agriculture and manufacturing sectors were the most gloomy about the general outlook, but construction was still positive.

Most economic forecasters are picking the the economy to show little or no growth in the first quarter of the year.

Earlier this month the Reserve Bank held its benchmark official cash rate steady at a record low 1 percent, saying it expected the virus impact to start waning at the end of March.

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