Improving World Economy Brings Optimism

12 April 2002

Improving World Economy Brings Optimism To Exporters

Signs of recovery in the US and confidence in the Australian market have led to more New Zealand manufacturing exporters feeling optimistic than pessimistic about the future, for the first time since December 2000.

A report prepared for Trade New Zealand by the New Zealand Institute of Economic Research (NZIER) showed that business confidence among exporters improved markedly in this quarter. A net 29% of manufacturing exporters expect general business conditions to improve over the next six months.

That compares with a 3% expecting deterioration in the previous survey.

Trade New Zealand Chief Executive Fran Wilde says the jump in business confidence is encouraging, especially at a time when international tension has led to conservatism and nervousness amongst overseas buyers.

“At Trade New Zealand our offshore offices have been incredibly busy, which is a sign of increased confidence leading to a boost in exporting for our local businesses. Of particular note for exporters is the improving economic outlook in two of our most important markets – Australia and the US. That is definitely good news,” she says.

“Our New Zealand-based client services teams, who are working throughout the country, report particular demand for our services in non-traditional export sectors such as technology, biotechnology, the creative industries, value-added engineering products and manufactured wood products.”

The report said encouraging signs for a recovery in the US may have relieved some of the anxiety firms were feeling towards the world economic growth, boosting their export sales expectations. However, firms reported an easing in export sales growth in the March quarter, suggesting the impact of a recovery is yet to be felt.
While a net 35% of manufacturing exporters are expecting an increase in export sales over the next three months, only 8% reported an increase in the past three months, compared to a net 10% in the previous quarter.

Of non-exporting firms, a net 21% expect business conditions to improve. The NZEIR report said the rise in confidence appears to be closely related to a substantial improvement in expectations about future export sales.

In line with the NZIER survey, Australian business confidence has also improved strongly. Optimism regarding future export sales has seen a strong bounce back in confidence and activity among Australian manufacturers.

Senior Trade Commissioner to Australia John Nicholson says there is a very noticeable increase in business confidence in Australia. Consumer spending on food, clothing, soft goods, household goods and recreation goods is up and the outlook for increased investment in the transport and mining sectors is particularly strong.

Mr Nicholson says more New Zealand companies than ever are participating in trade fairs and consumer shows to promote their products.

“This is likely to lead to more companies being ready to take advantage of improved confidence in the market and to increase their export sales to Australia,” he says.

NZEIR surveys 1500 firms nationwide in its quarterly survey of business opinion amongst manufacturing exporters. It covers a wide range of business indicators and calls for forecasts for the three months ahead as well as a report on the three months ended.

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