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Tuesday, May 31, 2005

Business confidence at 3rd lowest level in 17 years

Not good news at all:
New Zealand business confidence slumped to its third-lowest level in 17 years in May, while falling expectations of inflation and activity could prompt the Reserve Bank to call a halt to interest rate rises, a survey has found.

The key indicators in the National Bank's Business Outlook all worsened with the exception of pricing intentions, interest rates and inflation, which fell back to just inside the Reserve Bank's target band of 1% to 3%.
But an excellent time for tax cuts!

TVNZ: Business confidence slips
NZ Herald: Optimism dives to '87 crash low-point
National Bank: Business Outlook May 2005

NZ Business Confidence
National Bank Business Confidence Index

From the National Bank Business Outlook
The battle over inflation waged over this business cycle has a cost, although not of the epic proportions of the 1970s and 1980s when inflation was in double-digits. The New Zealand dollar has become overvalued, export performance has waned, and the cost of capital has increased until finally business confidence was crushed. Economic growth will be curtailed as a result and unemployment will rise (actually that has already started to happen).

Posted by Antarctic Lemur | 5/31/2005 11:32:00 am


Blogger Lucia Maria said...

Hadn't Labour been in power for six years, seventeen years ago? I wonder if that has anything to do with it....

5/31/2005 08:01:00 pm  
Blogger Antarctic Lemur said...

Yes indeed. And the only inbetween low was in 1999, after the Asian economic problems (?).

5/31/2005 08:05:00 pm  
Blogger Lucia Maria said...

Ooops, my maths is wrong. Seventeen years ago was 1988, Labour had been in power for 4 years. H1 does a better spin.

5/31/2005 08:53:00 pm  

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