By RICHARD BRADDELL
Things must be at a pretty pass. Business confidence has plummeted faster than in the Asian crisis, and to the same level.
Business has every reason to worry. Interest rates are rising, the Government took no notice when it barged through its unpopular ACC reform, and now the Industrial Relations Bill is going to send business costs through the roof.
But is it really that bad?
The answer is, of course not.
Yes, the plunge in the New Zealand dollar has put up the cost of imported inputs, but then the value of exports has shot up, too, which is why dairy farmers will receive a 20 per cent higher payout this year.
The gloom chorus was too much for Deutsche Bank chief economist Ulf Schoefisch, who called for a reality check in an opinion piece yesterday.
Arguing that there was good reason to be depressed when the Asian crisis struck in 1998, he said the reverse was true now.
Government policies may not be the friendliest that business has enjoyed, but nor has the roof fallen.
Contrast today with 1998. Back then, world growth was shuddering to a halt; now it may be slowing, but should still move along at a respectable 3.5 per cent next year.
Yes, interest rates have risen sharply, but from the lowest levels in decades and they will stay nicely below those of 1998.
Indeed, after two rollicking quarters of growth, Dr Schoefisch is one of those who sees room for a further 0.25 per cent rise in the official cash rate, although he accepts that the case is marginal.
Without putting words into Dr Schoefisch's mouth, the problem may be that different people are hurting during this cycle.
While the retailers and the domestic (read consumption) part of the economy suffered less from a high dollar, exporters paid the price and an already bad current account went hideously into deficit.
Now the export sector is winning with farmers being blessed by good weather as well as a favourable currency, while the tourism industry is thriving with April tourists up 18 per cent on a year earlier.
And it is this boom that is encouraging an already chastened Reserve Bank - one that let the economy overheat to everyone's cost in the early nineties - to ensure there is sufficient slack to meet exporter demands on resources.
The other reason for the lack of confidence is that business is extremely angry with the Government, having been totally ignored over ACC.
Now its objections to the Employment Relations Bill make a good rallying point for the disaffected.
Beyond doubt, not everything has gone the way business would like it, but there is a serious risk that an extreme reaction to a few relatively benign negatives might overturn a fundamentally excellent economic outlook.
<i>Between the lines:</i> Business outlook getting brighter
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