New Zealand Business Confidence Dives After Election
Business confidence has dived to a two-year low in October after New Zealand's recent general election, according to data from Australia and New Zealand Banking Group released Tuesday.
The business confidence reading in the bank's survey turned negative at a minus 10.1%, compared with 0% in September, though their business outlook measure showed that 22.2% of firms expect better times ahead, compared with 29.6% in September.
Most responses to the survey were received in the first half of October, before the Labour party secured a coalition deal with the populist New Zealand First party to form a new government. The coalition ended nine years of rule by the centre-right National party, which won the most votes in the election held on Sept. 23 but failed to get a majority in the 120-seat parliament. New Zealand had to wait while National and Labour negotiated with the kingmaking New Zealand First party before learning who would lead the country for the next three years.
"The finger can be pointed at political uncertainty," said ANZ chief economist Cameron Bagrie. "this month's survey primarily covers the uncertainty around the outcome and not the outcome itself. The latter will be next month's story. Importantly, other survey indicators held up better, though a tempered mood is becoming more apparent," he said.
The Labour party, led by Prime Minister Jacinda Ardern, wants to restrict foreign buyers from owning property in New Zealand and campaigned on a policy of reducing immigration to New Zealand, which was at a record high.
Mr. Bagrie said the old engines of economic growth in New Zealand such as migration, construction and housing were being replaced by fiscal policy and higher commodity prices.
"Transitions can be wobbly and create uncertainty, which is being exacerbated by changes in government policy and economic direction," he said.
Write to Ben Collins at ben.collins@wsj.com
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October 30, 2017 20:48 ET (00:48 GMT)