- Cameron Bagrie, ANZ's chief economist
Business sentiment in New Zealand dropped in August of the current year, decreasing for the sixth consecutive month, while the country's economy rebounds at a slower pace than expected. The ANZ Bank's survey revealed that 24.4% of companies predict the business conditions to improve, down from 39.7% a month ago. In July the Treasury of New Zealand worsened their forecast for economic growth in the year ending March 31, 2015 from 4% to 3.8%. Among largest sectors of local economy, the service industry confidence has been the most optimistic, with 41.4% of all companies expecting the environment to improve in the nearest future. Agriculture accounts for a very considerable part of country's economy, however, local farms forecast the business conditions to get worse, namely 34.4% of them.
At the same time, a number of economists point on negative impact from rising interest rates, as New Zealand has been the first developed economy to raise OCR. Right now the official interest rate is 100 basis points higher than in January of this year. Moreover, the economy suffers from a strong national currency and it puts pressure on exports and the trade balance as a whole, while the country is dependent on mining and dairy products' international deliveries. Previous week's data showed the balance of trade in New Zealand to be on a negative side for the first time in nine months.
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