Labour's incumbent Finance Minister Grant Robertson has been downgraded by big business leaders, while National's finance spokeswoman Nicola Willis has risen in their ranks.
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The Chinese economic slowdown is the major international risk to business confidence in New Zealand according to CEOs and directors responding to the Herald’s 2023 Election Survey.
This risk is particularly top of mind for the agribusiness export sector which has a large exposure to the Chinese market and has already impacted New Zealand’s largest company, Fonterra, where revenue has declined due to milk price pressures and the slow Chinese consumer recovery in the wake of Covid.
But it also affects the tourism and export education services sectors which came to a standstill as far as China was concerned during the Covid pandemic.
Last week, China’s top economic planner, the National Development and Reform Commission (NDRC), said the economy faces a lot of difficulties and challenges.
At a special briefing, the NDRC said that it would rollout policies to “restore and expand” consumption without delay as consumers’ purchasing power remained weak.
Reuters earlier reported China’s factory output and retail sales grew at a faster pace last month, but persistent weakness in the crucial property industry, a faltering currency and weak global demand for its manufactured goods continue to impact.
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Beijing’s official goal was for annual growth to hit 5.5 per cent this year. The economy came close to contracting during the June quarter. But a Reuters poll of 76 analysts based in and outside China predicted the economy would still grow at 5 per cent this year.
Dame Therese Walsh — chair of Air New Zealand and ASB Bank — predicts that while New Zealand has been verging on technical recession, “we can see toward the end of 2024 that there will be some relief.
“The global economy is a mixed bag and we need to be focusing on the opportunities in Asia-Pac where there is fast growth.”
Dame Therese Walsh. Photo / Michael Cunningham
Others are less sanguine.
Contact Energy CEO Michael Fuge forecasts, “severe headwinds with the interest rate hikes really starting to crunch combined with the dramatic slowdown in China”
Precinct Properties’ Craig Stobo explains that “higher business funding costs, unsustainably large fiscal imbalances, and a slowing China all increase risks for New Zealand businesses”.
Stephen Jacobi, who heads the New Zealand International Business Forum, observes New Zealand is not immune to global developments.
“Our economy has been resilient but low global growth and worsening terms of trade are having their impact.”
Jacobi rated protectionism, the Russian-Ukraine war and geopolitical volatility as “extreme concerns.”
His top business priorities are externally focused: Maintaining the momentum to foster trade links with India, and advocating for expansion of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
KiwiRail CEO Peter Reidy agrees. “At this stage, it’s looking like a year of two halves with a lot riding on an improvement in global conditions (for that read largely China) that has an impact back in New Zealand.”
Reidy also flagged insurance security and competitive pricing, rated the fifth most concerning international risk by CEOs at 6.77/10 as a developing major issue for New Zealand infrastructure owners and contractors.
Other international factors affecting business confidence include geopolitical volatility (7.21/10), cyber attacks (7.09/10), major weather events (7.01/10) and the imperative to put policies in place to combat climate change (6.98/10).
Beca Group executive chair David Carter noted the cyber threat landscape continues to evolve rapidly necessitating greater internal awareness and investment.
“Volatile conditions globally, combined with the impact of inflation and policy uncertainty are causing committed projects to be reviewed.”
