NZ economic year in review


15th December, 2021

Business confidence hit by ongoing uncertainty

Ongoing uncertainty due to pandemic restrictions has caused business confidence to fall in the latter part of 2021, despite a positive first half.

Expectations for New Zealand’s economic performance have declined in the final quarter of the year, despite hopes for a bumper holiday trading period.

That’s one of the noteworthy findings released in MYOB’s SME Economic Report: 2021 in Review, which surveyed over 1,000 Kiwi-based small and medium business (SME) owners and managers throughout the year.

Most evident in the report, which covers business confidence, outlook and other key questions posed regarding operations, is the impact that lockdowns and pandemic-related restrictions are continuing to have, with confidence rising earlier in the year before dropping off significantly following Auckland’s most recent lockdown.

In the first quarter, 59 percent of respondents listed COVID-19 as the number one impact to doing business locally, and that figure fell to 49 percent in Q2. Now, it’s 68 percent.

We also see that revenue expectations are closely aligned with business confidence, with most respondents remaining positive in the first half of the year, saying their revenue would be the same or higher in 12 months’ time. Again, in Q4, positivity has dropped with over one third of respondents indicating they now expect lower revenue in 12 months’ time.

Other key stats from the report:

  • Just 3% believe the NZ economy will improve significantly in the next 12 months
  • Nearly half (48%) of respondents indicate revenue is lower than the same time last year
  • 44% of business operators intend to increase prices in the next 6 months
  • The report also includes an interactive chart showing changes to key stats throughout 2021

MYOB’s head of customer service, Jo Tozer, believes New Zealand’s small and medium business community has been working hard to weather incredibly tough times over the past two years, which has had impacts in the past 12 months.

“In 2021, small and medium businesses across the country have had to adapt their services to manage lockdowns, supply chain issues, employee shortages and more,” said Tozer.

“Naturally, these factors along with a range of other economic challenges, have impacted their business outlook and revenue predictions across the year.

“While the latter part of this year has led to economic outlook concerns – this being most evident in the months following the community spread of the Delta variant – many businesses have done all they can to survive while their resilience has continued to be pushed to new limits.”

Glad tidings or false hope? What 2022 brings is anyone’s guess

While this year brought with it a new variant (Delta), ensuing lockdowns and changing restrictions, as well as the threat of another new variant (Omicron), New Zealand has been fortunate to stave off the worst of the pandemic for a second year running.

For many businesses, this holiday trading period could be the litmus test that sets them up to either shine or battle through in the new year.

“With high vaccination rates and regional borders opening up for summer, small businesses will be looking to consumers to provide some reprieve and an added boost to cashflow in the final lead up to Christmas and the summer break,” said Tozer.

“With changes to MIQ requirements and home isolation coming into effect in the New Year, business operators will also have high hopes around additional spending power that could come their way from Kiwis returning home in the first few months of 2022.”