NZ CEOs among world’s most optimistic

Most CEOs are brushing off low dairy price concerns.

The mood in chief executives’ offices around the country seems to be upbeat, with a study revealing New Zealand bosses are among the most optimistic in the world.

Concerns over low dairy prices and a wavering global economy have been brushed off by chief executives, a PwC survey suggests.

PwC chief executive Bruce Hassall says almost 90% of chief executives surveyed are either somewhat or very confident about their growth prospects this year.

“When compared to the global survey, that’s about the highest recorded for surveyed chief executives,” he says.

The report revealed just 23% believe the global economy will improve this year – down from last year’s 47%.

This is no surprise given the abysmal start to the year for equity markets, increased concerns about the Chinese economy and negative interest rates in Japan and Europe.

In spite of the gloomy outlook, some 40% New Zealand chief executives are “very confident” about their company’s growth prospects this year.

Mr Hassall says the New Zealand economy is actually in a bit of a “sweet spot.”

New Zealand’s economic growth looks poised to surpass most other advanced economies in 2016 – the IMF is forecasting an average 2.1% growth rate.

Treasury secretary Gabriel Makhlouf said New Zealand’s growth this year will be closer to 2.5%.

This is despite a weakening dairy sector. This week, prices at the GlobalDairyTrade (GDT) auction fell almost 3% in the fourth consecutive drop in prices on the platform this year.

Some analysts say there are still further declines to come.

But Mr Hassall says this isn't rolling through to confidence levels.

“It does not seem to be impacting businesses like it used to.

“If you go back to a previous time when the dairy sector was doing it hard, confidence levels were impacted right across the economy.”

He says that is not really the case today.

More costcutting on the horizon
Even though many chief executives are feeling optimistic about their businesses, a majority will embark on some sort of restructuring activity.

Some 64% say they will be cutting costs this year – just 4% shy of the global average.

Mr Hassall is downplaying concerns.

“That’s consistent with past years,”

He says it is more about trying to make businesses more streamlined.

“They are looking at how they can make their businesses more efficient and effective and, as a result, taking some costs out of their businesses.”

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