Finance Minister Michael Cullen said today that the drop in optimism shown in the NZIER March survey of business opinion
was not surprising given the survey's base and the deteriorating global economy.
"Some fall was to be expected as sentiment in New Zealand was bound to be affected to some degree by the deterioration
in the Australian and United States economies," Dr Cullen said.
However the NZIER result - showing pessimists slightly outnumbering optimists - contrasted sharply with the National
Bank March Outlook which had a net 30 percent expecting general business conditions to improve and a net 40 percent
expecting their own business activity to increase over the next 12 months.
"The difference in results may reflect the fact that the National Bank sample includes the [currently thriving]
agricultural sector which the NZIER does not.
"There may also be an element of correction in the NZIER survey," Dr Cullen said. "It recorded a huge swing in the
December quarter - from negative 40 percent in September to positive 21 percent - suggesting that the December result
probably overstated the strength of confidence."
Dr Cullen noted that the NZIER had itself observed that, although the headline confidence figure fell, other measures of
business capacity including capacity utilisation and domestic trading activity remained relatively strong.
"This suggests there is still sufficient momentum in the economy to propel us through any short-term slowdown in world
growth," he said.
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