Opinion:
When driving while taking Junior Bell to school, I was listening to a business report on the downturn in confidence in the business sector driven by ongoing uncertainty caused by the virus, which may (or may not) have emerged from a gain of function experiment gone wrong.
The "S word" of stagflation (inflation in a stagnant economy) wasn't mentioned but, the commentator in one breath said that we shouldn't jump to conclusions, and in the other said, "this will be interesting to watch over the coming months". While market analysts will continue to hedge their bets, there are signs of change on the horizon that flow right through to everybody – regardless of whether you are in state-sponsored employment and Covid is a whole lot of "never mind", or if you are enduring sleepless nights wondering when "normality will return" and you can get back to business.
Unfortunately, globalisation and the interconnectedness of people and markets mean that when negative change occurs it can spread widely. Pandemics are examples of this on steroids. So, in these times we cannot get sucked into the belief or assumption that nothing is going to change. Buddhists have a term I like – impermanence. And there is a sense of impermanence in markets that can and should be applied to business thinking – particularly when planning.
Inherently, I remain positive about the future, but in times of uncertainty we look for leadership and confidence from policymakers. This includes delivery of policy and how markets interpret these actions. On the local side, it would be good to hear what is planned for managing inflation and interest rates – both of which flow through to businesses and Kiwis in general. Internationally, supply chain and labour constraints (regardless of whether you agree on their longevity) will impact world markets and flow through to local businesses for some time to come.