Jacindamania immunity

Prime Minister Jacinda Ardern heads to Japan and the United Nations popular at home and abroad.

The most recent TVNZ-Colmar Brunton preferred prime minister poll showed 41 per cent of the country wanted her in the job.

Overseas she’ll meet an international media still very much in the throes of ‘‘Jacindamania’’.

Aside from Australian shockjock Alan Jones, there’s only one group seemingly immune to the craze: New Zealand businesses.

Surveys of business confidence in the Government have show consistent pessimism about the economy since Labour took office in 2017.

The most recent ANZ Business Outlook found a full 52 per cent of businesses surveyed expected economic conditions to deteriorate.

Yet the economy has continued to perform well, defying the dramatic slowdown seen in the rest of the world.

Statistics NZ said the economy grew by 2.1 per cent last year. While economic growth has slowed, it’s still ahead of international competitors.

Despite near record prices and demand for its iron ore and coal, Australia only grew at 1.4 per cent in the last year. Average growth in Businesses don’t feel the love for Prime Minister Jacinda Ardern. the OECD, a group of developed countries, was 1.6 per cent.

Economists have been trying to work out why businesses continue to feel pessimistic.

Most concede that business confidence surveys tend to be biased against Labour-led governments, and have little correlation to actual economic growth.

Trade Minister David Parker once brushed the surveys off saying the points conceded by the Canterbury Crusaders since 1996 had a stronger correlation to economic growth than the ANZ business confidence survey.

But there are signs business pessimism is beginning to feed through into investment and hiring decisions.

The ANZ survey also found most businesses expect their own performance to worsen. Nine per cent of businesses expect to reduce hiring, the highest rate since mid2009.

Most firms also expected to invest less in new buildings, plant and equipment.

Christian Leung, chief economist at NZIER, which also produces its own business confidence survey, said New Zealand’s domestic economy was quite strong, despite deteriorating international conditions. It found 31 per cent of businesses expect economic conditions to deteriorate over the next year.

But most recent GDP data showed growth slowing only slightly.

Leung pushed back against being too pessimistic, noting that household spending grew 0.5 per cent over the quarter.

‘‘Households are still reasonably optimistic,’’ Leung said. ‘‘The domestic story isn’t looking too bad at all’’.

Leung said the new Government’s infrastructure priorities, which had changed from the previous Government’s, had dampened confidence in the construction sector.

‘‘It’s more about uncertainty around how things will look over the coming years,’’ she said.

Leung said that with interest rates at record lows, it was an ‘‘opportune time’’ for the Government to borrow and invest.