A year ago, businesses and consumers were cock-a-hoop about this country's economic prospects in the Herald's annual Mood of the Boardroom survey. The mood we published yesterday was less confident. Even the Government acknowledges the outlook has turned cloudy.

Growth, says Finance Minister Bill English, is now likely to be 2-2.5 per cent this year, down from the previously forecast 3-3.5 per cent, and the number of job-seekers is poised to rise. Those admissions go nowhere near far enough for the Labour Party. New Zealand, it warns, may experience a severe downturn if no stimulatory action is taken.

The danger in such talk, as the Government has been keen to emphasise, is that it could prove self-fulfilling. Already, there is some evidence of this happening. This month's ANZ Bank survey of business confidence placed that commodity at a six-year low. The sentiment reflected the economy's loss of momentum and ongoing apprehension about plunging world dairy prices, the slowdown in China, and the likelihood that the stimulus provided by the post-earthquake rebuilding of Christchurch is levelling off.

Of these, dairy woes have, for good reason, captured most attention. Dairy products comprise a quarter of this country's exports of goods and services. The retreat from last year's $8.40 a kg payout to farmers has been dramatic. But, on several counts, that must be placed in context. Indebted farmers will be under considerable pressure and farm-servicing towns will feel the pinch. Mr English gave his Auckland business audience yesterday an account of hardy rural folk getting on with their calving and milking to survive the slump in prices. But with no early recovery in prospect and so much invested in dairy facilities, the mood of the milking shed will be stressed.

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Fortunately, the Reserve Bank and the Government have taken steps against Auckland housing speculation that have given the bank the ability to reduce interest rates for the sake of the rest of the economy. The exchange rate has dropped accordingly, cushioning the dairy shock a little and giving a boost to other exports. Tourism is doing especially well. So, too, are meat and kiwifruit exports. There is also optimism in much of the manufacturing sector, and if construction in Christchurch is slowing, house-building in Auckland could take up at least some of the slack. An inflow of migrants further benefits the economy.

The international scene is dominated by the consequences of China's need to move more of its economy from investment to consumption. That, however, is offset to some extent by the recovery in the United States and a more stable European market, thanks to the settling, at least for now, of the Greek crisis. Oil prices are also set to stay low with Iranian supply returning and Saudi Arabia still trying to undermine American shale production.

New Zealand's economy is now well geared to adjust to global conditions. The mood of its boardrooms is realistic. A growth peak has passed, but business is not despondent and has no reason to be.