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NEW ZEALAND'S recent economic good times are over and the prospects for the next year are dim, according to business people surveyed by the National Bank.
The bank's monthly business confidence survey for April, showed that although New Zealand businesses have enjoyed favourable economic conditions in recent times, momentum has waned as the Iraq war and severe acute respiratory syndrome, SARS, hit the global economy.
"The party is over... businesses have become very glum," National Bank chief economist John McDermott said.
A net 42 per cent of firms now expect general business conditions to deteriorate in the coming year - a figure "that does tend to take your breath away".
Finance Minister Michael Cullen said the weak business confidence was unsurprising, given the sluggish state of the world economy and the uncertainties affecting both the global and New Zealand environment.
However, the medium-term outlook remained solid. A net 33 per cent of respondents to the survey were pessimistic. Net results mean the number of optimistic respondents minus the pessimistic.
Moreover, the survey's important "own activity" indicator, which gauges businesses' generally optimistic attitudes, toward their own prospects, fell substantially.
In April, a net 7 per cent of respondents were optimistic about their own activity for the coming year down from 20 per cent in March.
Dr McDermott said the own activity question was historically one of the most accurate indicators of business outlook.
"Managers tend to know with great detail what's happening in their own business. Because you aggregate across a thousand businesses, it tends to give you a pretty good picture of what's actually happening."
The figure of 7 per cent for own activity indicated a lack of confidence associated with little or no real gross domestic product growth.
However, four of the five sectors surveyed expected at least a little growth in their activity.
But despite a building boom of "dizzyingly high levels", a net 8.2 per cent of respondents in the building sector expected their activity to decline in the next 12 months.
But the gloomiest of the five sectors surveyed was agriculture, Dr McDermott said. "It's reflecting the rapid movement in the exchange rate in the last few months."
"Farmers understand that will impact on their New Zealand dollar earnings," he said. This was on top of "underlying nervousness" caused by drier weather.