Lack of investment biggest threat to global economy

Lack of investment biggest threat to global economy, NZ ahead of the curve

20 July 2018

According to Grant Thornton International’s latest International Business Report (IBR) survey, New Zealand business leaders are becoming less confident about the economic outlook with optimism falling from 76% in Q1 2018 to 60% last quarter. This is consistent with the global average which has fallen from an all-time high of 61% in Q1 to 54% in Q2.

Strategic investment is the way forward for businesses, but our research shows overseas, businesses aren’t taking steps to counter the risks that this lack of investment presents. These businesses should be taking advantage of the rising revenues the global economy recovery has provided to invest for long term structural growth.

However, in New Zealand despite a dive in optimism in between the first and second quarter, investment in research and development has doubled, growing from 26% to 50%; this follows $1billion earmarked for R&D in this year’s budget. Investment in technology is also starting to follow suit, and expectations for employment also leapt to 60% from 46%.

“These figures tell us that although there’s some anxiety about the economy, a lot of business leaders are still doing well and making all of the right moves to future proof their operations,” says Paul Kane, Partner, Business Advisory Services at Grant Thornton New Zealand.

“The R&D investment figures are particularly promising, because although there’s a tax credit regime in the pipeline, business owners know they will still have to invest in further resources and technical abilities to meet the Government’s requisite standards - businesses don’t make this sort of commitment if they’re not confident they can pay the bills.

“New Zealand businesses look to be taking the opportunity to invest, but they will need to make sure they are investing to a level which will help them ride out the economic shift predicted in the future.”

“There is a sense that 2018 may be as good as it gets for the global economy. The bottom line for businesses is to ensure they can still make hay as the sun sets over what has been a boom during the last few years; history tells us it’s just around the corner,” says Kane.

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