The rising dollar, crippling interest rates, a tight wage market and uncertainty over Kiwisaver have combined to leave businesses ultra-pessimistic about the future.
New Zealand business confidence fell to a one-year low in the second quarter while fewer firms expected to raise prices, the New Zealand Institute ofEconomic Research (NZIER) said today.
A net 37 per cent of firms expected general business conditions to deteriorate in the next six months, against the previous quarter's net 15 per cent, which preceded the Budget, the rampant kiwi dollar hurting exporters, and Dr Bollard's latest hike in interest rates.
The NZIER said firms were less optimistic about their own short-term outlook.
A seasonally adjusted 13 per cent of firms expected their own activity to improve in the next three months, compared with a net 17 per cent in the previous quarter.
Capacity utilisation - the level of use of resources within the economy - eased to 91.56 per cent, its lowest since the December quarter 2005 and down from 91.8 per cent in the previous quarter.
The seasonally adjusted headline measure of confidence also softened with a net 30 per cent expecting a deterioration in conditions compared with a net 9 per cent in the first quarter.
A net 35 per cent of firms expected to increase prices in the coming quarter, while a net 25 per cent had increased their prices in the past three months, compared with a net 40 per cent and 27 per cent respectively, in the previous quarter.
