The official cash rate will fall, inflation will remain volatile and the prospect of a sustainable, primary sector-led recovery is around 50/50 over the next 12 months, according to a poll of members of the Institute of Directors.
The ‘pulse check’ was undertaken a few days after the Q2 GDP announcement that revealed a 0.9% drop from the previous quarter.
Susan Cuthbert, from the IoD’s Governance Leadership Centre, says in a statement that the poll supports the general sense of the economy flatlining.
“Just this week, ASB announced that investor confidence fell in the June quarter, and the NZ Herald’s Mood of the Boardroom showed business confidence has fallen since the same time last year.”
She says that while this was a small straw poll of directors “those who responded were aligned with some of the perspectives being shared in the business community. A more fulsome picture of governance-specific concerns will emerge from our 2025 Director Sentiment Survey, which will be released in November.”
In the IoD’s ‘pulse check’, 57% of respondents predicted a 25-basis-point cut to the OCR in October, while 43% saw a 50-basis-point cut (ASB this week revised its prediction up to 50 basis points).
…inflation will remain unpredictable over the coming year with 72% expecting more volatility…
Respondents believe that inflation will remain unpredictable over the coming year with 72% expecting more volatility. That will likely continue to impact consumer spending and business costs, Cuthbert says.
“The latest Auckland Business Chamber confidence report found consumer confidence and demand, and inflation and interest rates, to be two of the top five business concerns in our largest city. Directors clearly agree.”
And, while there has been good news for agricultural exports recently, directors do not see this as the start of a broader economic boost.
“Our members are cautious about the prospect of sustainable economic recovery over the next 12 months growing from the ‘green shoots’ in the primary sector,” says Cuthbert. “Respondents were split 46% no, 44% yes and 10% seeing it as too close to call.”
