Latest research from Grant Thornton International reveals that business optimism continues to decline amid swirling economic uncertainty; across the Asia Pacific region, optimism took a dive in Q2 2019 dropping to 23% from 55% percent in Q2 2018.
Currently, there is no shortage of ambiguity, both economic and political; Brexit, the OCR drop and a weak export demand from China are all contributing to a perceived poor outlook.
Although economic growth in New Zealand has been stable over the past year, it is projected to ease in 2020 as private consumption slows down, net immigration declines, and housing wealth gains dwindle.
Productivity growth has been weak as businesses face cost pressures, margin squeeze, regulation, and difficulty finding skilled labour.
Companies need to prepare for economic uncertainty and disruption by investing in technology and retaining talent.
“Uncertainty is always a reality in business; the key is an ability to respond to change and to stay competitive”, says Paul Kane, Partner, Business Advisory Services at Grant Thornton New Zealand.
“There are ways of managing growth; smart operators will have strategies in place to deal with obstacles and jump on opportunities.
“Technology can help expedite this; businesses who are investing in cloud technology and business intelligence are better equipped to respond to changes within their industries.
“Automation and artificial intelligence can also limit skills shortages by getting people to focus on other valuable activities like building client relationships.
“Even in the current labour market, organisations can maintain a leading edge by retaining talent,” Kane says.
He points out that many economic fundamentals are still sound.
“A tight labour market creates rising wages and falling unemployment, which in turn helps to maintain consumer spending and creates some stability for economies.
“It is sensible for businesses to think about how economic factors may impact them, but their mantra should be: ‘plan for disruption, aim for growth’”.
Paul Kane
Partner, Business Advisory Services
Grant Thornton New Zealand
T +64 9 922 1276
E paul.kane@nz.gt.com