February 1, 2023
As the shock of November’s interest rate hike and recession concerns subsided, business sentiment in New Zealand rebounded sharply at the beginning of the year from a record low. However, the outlook remained gloomy due to intense inflationary pressures and the possibility of further central bank policy tightening, according to survey results from ANZ.
The retail and manufacturing sectors drove the increase in the business sentiment index, which increased by 18 points to -52 in January from -70.2 the previous month, according to the ANZ Business Outlook survey.
The index tracking businesses’ anticipated activity increased 10 points from December to -16 in January, and the indicator for planned investments increased little to -13.7 from -20.5.
According to the ANZ, the survey continues to suggest that the RBNZ may be engineering a rougher landing than anticipated, with negative implications for home investment, corporate investment, and overall GDP.
The pressures on prices and inflation persisted in January. As it was 6.23 percent in December, price growth projections stayed stagnant at roughly 6.0 percent, indicating no appreciable improvement this year.
The Reserve Bank of New Zealand should continue raising rates for some time, according to ANZ. The ANZ economists anticipate a 50 basis point increase in February.
According to Satish Ranchhod, a senior economist at Westpac, New Zealand firms continue to express serious concerns about inflation and the state of the economy.
The analyst also noted that today’s improvement in morale seemed to be more of a “dead cat bounce” than an indication of a strengthening economy.
In the upcoming year, Ranchhod stated, “We continue to believe that economic growth would drop considerably.”
In fact, as the effects of interest rate increases spread throughout the economy, we predict that the economy will enter a recession in late 2023.
Even though the comparable indicator increased to -11.1 from -16.3 in December, the ANZ poll revealed that employment intentions nevertheless remained extremely low in January. Construction corporations had dubious intentions when it came to hiring new people.
Retail businesses plan to increase their prices by 79 percent over the next three months, while manufacturing businesses plan to do so by 66 percent. All industries had higher pricing intentions, with the exception of agriculture, which was restricted from setting its own prices.
Source: RTT News
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