The Treasury is confident its medium-term outlook is on the mark, despite telling the OECD in July that it feared falling business confidence would weaken the economy.
In a briefing paper to Organisation for Economic Co-operation and Development officials, the Treasury outlined the impact poor business confidence posed to an economy
losing momentum.
Treasury Deputy Secretary Iain Rennie said yesterday that the report was already outdated, as a National Bank survey on Tuesday showed a rebound in business confidence.
"That would lead us to say 'yes, we think the business confidence effects probably have been negative, but we don't see them changing the medium-term outlook'," he said.
The OECD report pointed to a number of "quite strong" features of the economy, while indicating that confidence could affect employment investment if it stayed down for a sustained period.
The survey found a net 14 per cent of firms expected general business conditions to deteriorate in the coming year - an improvement from a net 36 per cent in July. Finance Minister Michael Cullen welcomed the rebound, saying it reflected strong corporate profits and solid growth in the export and tourism sectors.
National Bank chief economist Brendan O'Donovan said the most encouraging feature was that companies saw their own activity as on the mend. The survey was completed before the New Zealand dollar plummeted and the latest spate of petrol price increases.
- NZPA
