Businesses are worried about the new government’s policies and are expecting economic conditions to worsen, says the Institute for Economic Research.
The Institute’s December Quarterly Survey of Business Opinion, published this morning, shows a net 11 per cent of businesses are expecting economic conditions to get worse over the coming months.
That is on top of the hit it took last quarter ahead of the general election.
Now businesses are facing "uncertainty over the effect of new Government policies," said the institute’s principal economist Christina Leung.
"It appears uncertainty over new Government policies have made businesses even more downbeat," she said.
However, businesses’ own forecasts of their trading levels are largely unchanged with 10 per cent reporting a lift. Activity indicators are also holding up.
Overall, the drop in confidence "largely looks to be a sentiment thing," Ms Leung said.
Confidence traditionally dropped when Labour took office and rose when National took office; however the actual activity indicators showed a similar demand on the economy, she said.
The dry conditions were affecting confidence in dairy-intensive regions such as Southland and Taranaki.
Urban regions also showed a significant drop, particularly in Wellington where a net 33 per cent of businesses expected economic conditions to worsen in the coming months.
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