Business confidence sinks but ANZ warns the worst may be yet to come
Tuesday, 31 March 2020
An ANZ survey shows Kiwi businesses are more pessimistic about their prospects for the year ahead than at any time since its survey began in 1988.
A net 23 per cent of firms expected to cut jobs in the year ahead, and among retailers that figure was 35 per cent.
Chief economist Sharon Zollner said the March survey made for 'dreadful reading'.
But she said there would probably be worse to come, given that responses received later in the month were more negative than those it received prior to ANZ sending out a reminder to complete the survey on March 19.
Business confidence in the economy plummeted 45 points to a net negative 64 points.
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A net 27 per cent of firms forecast weaker activity for their own business in the year ahead, which was the most downbeat figure since the survey began.
A net 41 per cent of retailers were downbeat on their company's prospects, and confidence among services and construction firms also crashed by more than 40 points.
Zollner said confidence was on a 'very steep slide'.
'We've never seen such a broad economic shock strike with such ferocity.
'Firms are right to be alarmed. Both fiscal and monetary policy are leaping into action but a severe recession is guaranteed.'
The crisis would end, she said.
'But with no-one able to tell businesses when that will be, any attempts to shore up confidence are likely to get little traction in the near term.
'It's going to get worse before it gets better, and firms know that,' she said.
Earlier on Tuesday, Treasury figures showed the Government had entered the coronavirus-crisis month of March with its books in the best shape since 2011, by some measures.
Net core Crown debt stood at 19.2 per cent of GDP, or $59.8 billion, at the end of February, which was $600m or 0.2 per cent below the forecast the Treasury made in December.
In percentage terms, it was also the lowest figure reported since 2010.
However, the Crown accounts have been rendered essentially irrelevant by the massive fiscal response the Government has since announced to soften the impact of the level-4 coronavirus lockdown on wage earners and businesses, and by forecasts that the country's GDP could fall by 10 per cent or more.
'Obviously, these numbers will look a lot different when the next set of accounts come out,' Robertson said.
'But they indicate the economy's strength and the Government's ability to soften the impact and support New Zealanders and businesses,' he said.
Some early impact from the financial downturn triggered by the coronavirus outbreak spilled into the figures released by Treasury.
The Government's broader operating balance for the financial year to the end of February was $3b in deficit – $4.8b worse than forecast – due to a reduction in the value of ACC's investment portfolio and lower interest rates, which impact ACC's estimate of the cost of paying its claims.