NZ Business Confidence up but Global Ranking Down

Media Release
Embargoed for use from 1a.m. 23 January 2007

Optimism Paradox Sees New Zealand Business Confidence Move Up, But Global Ranking Go Down

While an international survey confirms New Zealand businesses have more optimism than a year ago, much of the rest of the world is showing even greater levels of business confidence.

New Zealand has slipped from 19th to 22nd on the global optimism rankings under the Grant Thornton International Business Report survey.

Yet it was considerably more optimistic than in the previous Grant Thornton survey, with an optimism / pessimism balance* of +42%, compared with +23% previously. The problem was that, generally, optimism levels lifted significantly and it was overtaken by nations such as Russia, the United Kingdom, Luxembourg and Spain.

At the same time, Turkey suffered a dramatic fall in business confidence, reflecting difficulties it has faced in negotiations to join the EU among other factors.

In Australia the balance slipped slightly to +61% from +64% the previous year, causing it to fall to 13th position from 7th.

India, which topped the league last year, is again the star, recording an unprecedented +97%, up from +93%. The global average improved to +45% from +39% last year. Asian business owners continue to be the most confident in the world, with India, the Philippines, China and Singapore taking the top four positions in the survey.

Grant Thornton New Zealand spokesman Peter Sherwin commented: “Last year New Zealand’s results reflected a downhill run in both business and consumer confidence at that time. This time around, the survey is pretty much in line with the gains in particular in business confidence as the worries of a pending economic slump have effectively dissipated over the intervening period.

“As it turns out, much of the rest of the world is seeing things in a better light too. But that can only be good for international business, and especially for New Zealand exporters, hopefully offsetting some of the worries they have over the effects of the rising Kiwi dollar.”

Mr Sherwin said New Zealand businesses showed lower optimism than the previous year in respect of turnover and selling prices. They had higher expectations on exports, employment, profitability, and investment in new buildings, plant and machinery.

Australia showed higher optimism on all counts except investment in new buildings.

The highest optimism levels shown by New Zealand in the Grant Thornton survey occurred in 2005 (+64%) and 2004 (+49).

Overall, the International Business Report shows businesses in 29 out of 32 countries are optimistic about their economy’s performance in 2007 with 24 being more optimistic than last year.

Peter Sherwin said: “For the first time in five years the findings of our survey don't appear to be influenced by extraordinary global events such as terrorism, natural disasters or potential health scares.

“The findings from the International Business Report show a rebalancing of the global economy with increasing optimism in Europe and a more pessimistic outlook from US business owners. However, their level of confidence cannot match the emerging economies, especially India and China.”

ENDS

*The figure is the percentage balance of the respondents who are optimistic less those who are pessimistic. The highest possible figure countries are able to record is +100% and the lowest is -100%.

About Grant Thornton
Grant Thornton International is one of the world's leading organisations of independently owned and managed accounting and consulting member firms providing assurance, tax and specialist advice to independent businesses. Grant Thornton firms operate in 113 countries in 521 offices worldwide. In New Zealand there are member firms in Auckland, Wellington, Christchurch, Dunedin and Whangarei.

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