Economist has doubts about soaring confidence
A recent spate of surveys shows New Zealand business confidence soaring but one leading economist says real economic activity remains to be seen.
Two separate surveys released today reinforce the sentiment that New Zealand businesses are feeling bullish about the year ahead.
A report commissioned by GE Capital found 73 per cent of mid-market businesses surveyed were optimistic about growth in 2014 and expected increased annual growth levels of 2.8 per cent.
Mid-market businesses were defined as those which generated annual turnover between $2 million and $50m.
Also released today was the Global Entrepreneur Indicator survey, which found New Zealand entrepreneurs were also optimistic about economic conditions.
Of those surveyed, 95 per cent predicted improvement in the next six months, compared with just 48 per cent globally.
Earlier this week a New Zealand Institute of Economic Research Quarterly Survey of Business Opinion said confidence remained at net 52 per cent of firms positive, seasonally adjusted, the highest since June 1994.
Also released this week was the ANZ quarterly survey, which found small-business confidence reached a new high last month.
But Business and Economic Research (Berl) chief economist Ganesh Nana said there was a question mark around the breadth and depth of New Zealand's economic recovery.
"I'm of the opinion that it's a fairly narrowly based recovery based on dairy and forestry exports and the rebuild of Christchurch and there's actually not much else to it," Nana said.
There had been a slew of confidence surveys coming out with similar numbers which did provide businesses with some confidence, he said.
"But I'm still waiting for that confidence to translate into real economic activity outside the core drivers of the Christchurch rebuild and dairy exports."
For example, Reserve Bank figures showed credit available to small and medium enterprises outside the agriculture sector was still well below what it was in 2008, he said.
Westpac chief economist Dominick Stephens said current levels of business confidence were founded because New Zealand's economy was growing at its fastest pace in nearly a decade.
The mid-market research surveyed 730 businesses and the Global Entrepreneur Indicator research surveyed its 57 members in New Zealand.