Alan McDonald: EMA Head of Advocacy on Kiwi businesses raising concerns over the war in Iran

The latest NZIER Quarterly Survey of Business Opinion has revealed business confidence has taken a hit for the March quarter.

Only a net 1 percent of firms expect better general economic conditions over the coming months on a seasonally adjusted basis.

EMA Head of Advocacy Alan McDonald says people were expecting the economy to get better - and this conflict put an economic 'handbrake' on recovery. 

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Episode Transcript

Speaker 1 (00:00):
Alan McDonald is EMA's head of advocacy and strategy and
with us high Allen. I mean this will be ultimately
she eased back to the Iran war, right, Yeah.

Speaker 2 (00:10):
And there's a few indicators around that show that things
are really quickly coming off the boil in terms of
confidence and just looking ahead just at the wrong time
of course.

Speaker 1 (00:20):
Okay, I mean does that drop off in optimism realistic?
Are people being realistic or they being too gloomy?

Speaker 2 (00:29):
I think it's just put a handbrake on the expectations
they have. I mean, if you look at the say,
for example, the Performance of Manufacturing index that had five
or six consecutive months of being positive based on forward orders,
based on intent to invest in, based on intent to
and hire. So people were looking ahead and think things
are going to get better, and then we get this
great big handbrake with the around conflict that's going on.

Speaker 1 (00:52):
Tell you what was surprising about I think construction industry
was gloomy, which wasn't at all a surprise, but manufacturing
was reasonably upbeat. Thirty four net of manufacturers are expecting
economic conditions to improve.

Speaker 2 (01:04):
Why I think the answer lies and further into the
report where it comments on the export forward orders look
holding up quite strongly. And if I look at our
own membership base, probably about just slightly under thirty percent
identify as manufacturers and a similar number identify as exports,
when actually they're probably both for many of them are,

(01:25):
and the export orders, as we know, have have been
holding things up. But also if you delve into the
PMI the performance of manufacturing one while manufacturing had come
off the boil a little bit, sixty plus percent of
the comments were negative. And then when we surveyed our
own members on the impacts of the fuel crisis, more

(01:45):
than eighty percent of them were expecting their own activity
to reduce will be impacted negatively. So I think the
longer list goes, the more those manufacturing numbers might start
to reflect what that overall business confidence numbers and the NZI.

Speaker 1 (02:01):
What's the biggest problem for manufacturers at the moment is
it access to energy?

Speaker 2 (02:06):
Uh? Well, access to energy includes electricity as well as fuel.
That's longing, but fuel coming through strongly. And construction, as
you've mentioned the distribution sector. We know the problem with
plastics and the costs going into their retail activity coming
off the boil and the hospow industry, also saying that.

Speaker 1 (02:29):
Numbers I think we probably live there. Sorry about the
quality of that.

Speaker 2 (02:37):
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