Business confidence index

IBISWorld forecasts the business confidence index to climb by 5.2 index points in 2025-26, to average 149.7 index points. Inflation is expected to trend downwards in the current year, supporting an anticipated improvement in the business confidence index. The Reserve Bank of New Zealand (Te Putea Matua) is likely to continue reducing the cash rate over the year as inflationary pressures begin to ease. This trend is anticipated to place upwards pressure on business confidence.

New Zealand's early success in containing the virus' spread contributed to a steady recovery in business confidence following the initial national lockdown and COVID-19-induced recession. Business confidence remained mostly positive over the first half of the 2021 calendar year. However, further outbreaks and subsequent lockdowns contributed to confidence levels dropping into negative territory.

The business confidence index has remained volatile over the past five years. The COVID-19 pandemic continued the trend of negative business confidence. However, improved conditions on the other side of the pandemic, like the reopening of New Zealand's borders, generated some optimistic respite. Despite this renewed optimism, business confidence took a steep dive following aggressive cash rate hikes in 2022-23, as downstream businesses responded to sharply elevated borrowing costs with delayed investment and hiring plans. Yet, improved conditions emerged once the Reserve Bank of New Zealand (Te Putea Matua) signalled an end to rate hikes and inflation began to moderate. Despite the initial pessimism, business confidence recovered strongly over the three years through 2025-26. Overall, IBISWorld forecasts the business confidence index to become positive and rise at an average annual rate of 14.5 index points over the five years through 2025-26.