NZ economy: prevailing headwinds

The latest BusinessNZ Planning Forecast reveals business and consumer confidence is low, with factors at home and abroad hampering our recovery.

The Forecast for the June 2022 quarter shows global economic recovery post-Covid has taken a hit in both prolonged supply chain disruptions and geopolitical risks driving inflationary pressures and investment uncertainty.

With the Reserve Bank reining in its quantitative easing policy and raising the OCR, many businesses and households will be feeling the pinch of steadily increasing interest rates – a reality check for those who thought lower rates were here to stay.

BusinessNZ Chief Executive Kirk Hope says there are several concurrent risks to our recovery.

“We’re headed into a period of slow economic growth, with outside factors like the war in Ukraine and global supply chain issues exacerbating the issue. Onshore, a greater emphasis on the quality and targeting of Government expenditure is required, as New Zealanders start to tighten their belts.”

The BusinessNZ Economic Conditions Index sits at 1 for the June 2022 quarter, up 4 on the previous quarter and down 13 on a year ago. The index overall shows little change for the June 2022 quarter; however it masks large changes in the sub-indices, including slight improvements in economic growth but offset by deteriorating monetary policy conditions (higher interest rates and inflationary pressures) and a continuing dip in business and consumer confidence.

The BusinessNZ Economic Conditions Index tracks 33 economic indicators including GDP, export volumes, commodity prices, inflation, debt, and business and consumer confidence.

The BusinessNZ Planning Forecast for the June 2022 quarter is on www.businessnz.org.nz

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