New Zealand's reliance on export-led growth is likely to underpin nervousness around a trade war between the US and China. Photo / AP
New Zealand's reliance on export-led growth is likely to underpin nervousness around a trade war between the US and China. Photo / AP
New Zealand chief executives seem more upbeat in KPMG's latest CEO Outlook Survey Report than respondents in other recent business surveys that are showing sentiment souring as firms fret over the Labour-led government.
KPMG NZ chief executive Godfrey Boyce said the survey pointed to a "slight softening" in confidence but he didn't view this "as a faltering of confidence – but more of a realistic re-balancing".
Given that New Zealand has come through a period of robust growth, "a little tempering of confidence is both realistic and expected," he said.
He did note, however, bedding in a new government with new policies "inevitably brings a level of uncertainty."
In contrast, the ANZ business outlook last week showed confidence at a 10-year low, an outcome latched onto by the government's critics as a warning against intrusive regulation.
According to the KPMG annual survey of 50 New Zealand chief executives, 64 per cent expressed confidence in New Zealand's growth outlook for the next three years, compared to 74 per cent 12 months ago.
New Zealand CEOs' expectations of growth within their own organisations also reduced since the last survey, with most now forecasting less than 2 percent revenue growth over the next three years versus 86 percent expecting more than 2 percent top line growth in the prior survey.
According to the report, CEOs see rising global protectionism as the greatest threat to growth and have regressed on digital transformation.
The past year has seen "global vagaries continuing to play out with a return to territorialism in response to Brexit and the US government's protectionist trade direction," said Boyce.
A total of 68 per cent identified a return to territorialism as the greatest threat to their organisation's growth.
New Zealand's reliance on export-led growth may underpin that nervousness, particularly if a trade war between the US and China breaks out, said Boyce.
"Barriers to trade raise the costs of export and damage competitiveness. This can impact grower returns and undermine growth, with knock-on effects on jobs and regional economies," Zespri International chief executive Dan Mathieson told the KPMG survey.
Dan Mathieson, Zespri chief executive. Photo / Nick Reed.
Among other things "compared to their global cohort, and their own responses from a year ago, New Zealand leaders have lost confidence in their organisations to deliver digital transformation," according to the report.
Only 28 per cent of those surveyed were confident they were disrupting their sector rather than waiting to be disrupted. That number is sharply lower than the 88 percent who were confident a year earlier.
A little more than half of New Zealand CEOs - 58 per cent - are "personally prepared to lead their organisation through a radical transformation of its operating model to maintain competitiveness" compared to a global metric of 71 per cent.
Also, only 26 per cent are "confident that existing leadership is fully equipped to oversee the transformation" compared to a global response of 44 per cent.
According to the survey, 98 percent of those surveyed see digital transformation as a challenge rather than a threat but 64 percent said their organisation is struggling to keep pace with change, versus a global 36 percent.
Boyce said other key risks to growth are cybersecurity and environmental/climate change. Only 32 per cent of surveyed chief executives see their organisations as well placed overall to withstand a cyber attack, when compared to their global counterparts, at just over 50 per cent.
