Economic optimism rising, says new survey

Confidence in New Zealand's economic future is rising, says the latest BNZ survey.

A new survey showing improving economic confidence points to a risk of continuing upward pressure on fixed borrowing costs.

A net 27 per cent of respondents to the latest BNZ confidence survey, published today, expect the economy to be better in a year's time.

That compares with a net zero per cent expecting change in the bank's early April survey and 23 per cent expecting deterioration two months ago.

BNZ chief economist Tony Alexander said the survey results had implications for financial markets and borrowers in particular.

"Over the past two months world markets have backed away from the Great Depression scenario in the face of a multitude of better-than-expected data releases offshore," said Alexander.

That had encouraged investors to shift from safe haven assets towards growth and risky ones. That helped explain the near 30 per cent rise in some sharemarkets, the 10c jump in the NZ dollar since early March, and increases in fixed wholesale funding costs facing banks.

"Our survey results and other data releases -- including last Friday's better-than-expected US employment report -- imply that unless world economic data turn down again there will be continuing upward pressure on fixed borrowing costs," Alexander said.

Some respondents to the survey noted buyers running stocks down and needing to reorder, some cited lower interest rates, most simply noted an improvement in sales and general sentiment in recent weeks.

- NZPA