Loitering in the boom and bust cycle

Burdened by higher interest rates and weak NZ dollar, only 37.18 percent of respondents expect to increase capital expenditure in the next 12 months according to the latest quarterly business confidence survey by financial market risk managers, Greenwich Treasury Advisory.
This contrasted with nearly half the respondents in the December 1999 quarter survey who expected to increase capital expenditure.
Greenwich director Earl White said Government’s recent moves to change ACC and the Employment Contracts Act have unnerved business and this, combined with higher interest rates and weak NZ dollar has caused many people to put capital expenditure on hold.
“This is also reflected in significant decrease in the number of respondents who expect to increase sales over the next 12 months,” said White.
In the latest survey, 61.54 percent expect to increase sales compared to 74.71 percent last December.
In the survey 62.82 percent thought their business would be better off in the last 12 months compared with 67.82 percent in the previous quarterly survey.
“Our latest survey paints picture of the NZ economy very much at cross roads,” says White. “If interest rates continue to climb and businesses become increasingly threatened by legislative changes, there’s very real risk that the embryonic recovery that started in the second half of last year will fall in heap and once again we will experience damaging boom and bust cycle.”