The latest gloomy business confidence survey highlights how serious the tighter bank lending is becoming, says economist Cameron Bagrie.
ANZ Bank's Business Outlook survey for February showed business getting gloomier again after a bounce back late last year.
Overall the index sank seven points with a net 31 per cent of respondents expecting general business conditions to deteriorate in the year ahead.
A net 38 per cent of firms said they expect it will be harder to get credit - a sharp drop from December.
Bagrie said the squeeze going on lending was being underestimated and could start to become a serious headwind for the economy.
Banks were taking a close look at risk and expenditure and being more cautious, he said.
There was also flow on from the Australia's Royal Commission Conduct and Culture Report as demands for more responsible lending took hold.
"Expenditure is now being more actively scrutinised," he said. "Banks will require more information on borrower's personal situation."
Bagrie said he believed the risks of the tighter lending environment were being underestimated.
Overall the Outlook survey found 11 per cent of firms still expecting their own businesses to improve but that was down three points from the last survey in December.
"Anecdotally, the regional economy is booming, but there does seem to be a degree of wariness amongst firms," said ANZ chief economist Sharon Zollner.
"Increasing evidence of a global slowdown is likely playing a part, as well as the uncomfortable combination of elevated costs but limited ability to pass these costs on, which is impacting firms' profitability."
The survey found the agriculture and services sectors were the most optimistic and the construction industry the most pessimistic.
A net 26 per cent expect to raise their prices, inflation expectations eased from 2.15 per cent to 2.06 per cent.
Commercial construction companies' intentions to build fell 6 points to 4 per cent while residential construction companies' intentions fell 29 points to 4 per cent.
"This data is volatile but residential intentions are trending down while commercial intentions are back in the black after being negative in June to October last year," Zollner said.
It was disappointing that the bounce in activity indicators seen towards the end of last year appeared to be petering out, she said.
"Clearly the economy is stretched at the moment, but it does appear that momentum has waned markedly over the last six months. We continue to expect that the RBNZ will, as the year goes on, become less certain that core inflation will continue rising towards the midpoint of the target band. We are forecasting a cut in the Official Cash Rate in November."