Word of warning for NZ businesses amid rise optimism

Word of warning for NZ businesses amid rise in international optimism: global survey

2 February 2018

Global survey findings from Grant Thornton’s latest International Business Report (IBR) reveal that global business optimism is continuing on a positive trajectory.

In the Asia Pacific region, optimism has increased significantly, leaping to an historic high of 58% over the last year and APAC GDP growth is forecast to reach 5.5% this year, ahead of global projections.

New Zealand business optimism remains at 68% compared to last quarter after a slight, but expected slump around election time, dropping from 80%. The New Zealand Institute of Economic Research has noted the decline in confidence was less severe than in previous election years.

New Zealand continues to pull ahead of Australia, who sits at 60%.

“Revenue and profitability forecasts are also starting to soar globally since last quarter, and are at their highest since before the global financial crisis; businesses are expecting to see both continue to rise,” says Paul Kane, Partner, Privately Held Business, Grant Thornton New Zealand.

“However, firms must avoid short-termism and increase their investment in long-term growth.

“Unfortunately, the IBR has revealed that investment in employment and technology is starting to slip among Kiwi businesses surveyed, and investment in plant and machinery has declined to an historical low of six per cent. Meanwhile a lot of our global counter parts are boosting investment in these areas.

“New Zealand businesses will need to meet growing demand through hiring more staff and the move towards automation presents opportunities for businesses to invest in technologies to increase productivity”.

“We are fast approaching the peak of the current economic cycle. Businesses need to start thinking about what they can do to leverage opportunities in the current environment to ensure the party doesn’t stop when the global economy comes off its current high,” says Kane.

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