NZ economy: crosscurrents of risk
The BusinessNZ Planning Forecast reveals rising international and domestic risks, making business planning uncertain and fraught.
The Forecast for the March 2022 quarter shows inflationary and activity-constricting impacts resulting from international circumstances including the war in Ukraine and ensuing international fuel price rises.
The Forecast also shows a complex set of domestic risks, where almost all sectors are facing supply constraints on labour and materials as a result of regulatory measures including partially closed borders. This is putting upward pressure on prices, while the ongoing spread of Omicron is seriously impacting on the ability of many businesses to function efficiently as people self-isolate.
“NZ faces both international and domestic risks as the Russian invasion of Ukraine continues apace, and as numerous domestic issues arise from NZ’s Omicron response and widespread inflationary pressures,” BusinessNZ Chief Executive Kirk Hope said.
The BusinessNZ Economic Conditions Index sits at 3 for the March 2022 quarter, up 2 on the previous quarter and down 2 on a year ago. The index overall shows little change for the March 2022 quarter, however this masks large changes in the sub-indices, including improvements in economic growth largely offset by deteriorating monetary policy conditions – higher interest rates and inflationary pressures – and a large dip in business and consumer confidence.
The BusinessNZ Economic Conditions Index tracks 33 economic indicators including GDP, export volumes, commodity prices, inflation, debt, and business and consumer confidence.