Cautious approach still merited
By Dougal McGowan | Posted: Thursday February 1, 2018
A word from Otago Chamber Chief Executive, Dougal McGowan.
The last week has seen the usual plethora of data and economic reports, which coincide with most people returning to work and the start of a new year. Each week there are international, national, regional and local reports which all look to tell their own story in their own way, to inform the public about past and future trends. At times this data follows a similar trend, and in others, it appears to shade a clear picture.
This is definitely what we have seen in the last week. Internationally there are still concerns about Brexit, the stability of the Trump administration and general uncertainty around the global economy, with many countries still being subjected to deflationary pressures.
Here in NZ, there has been an election and change in government and all the uncertainty that goes with it, causing a sharp dip in business confidence throughout the country. This is where it starts to get into the statistical debates about what the data is telling us.
Locally, reports have shown that Otago has remained one of the brightest spots, with the highest confidence levels in the county. This is due in part to the vibrancy and growth in central Otago, which adds to the lift throughout our region. We also know that business activity is strong. There is continued buoyancy for the food and beverage, hospitality and accommodation sectors, provided by tourism and events coming to the city. These events bring optimism and provide vitality to the city, such as the NZ Masters games, TRENZ, graduations, Orientation week etc. Dunedin is looking forward to the return of students,
People are also still positive about building and possible infrastructure opportunities that are regularly referenced around the city, such as the hospital rebuild, building projects, harbour redevelopment.
The story that added to the mix was the extremely strong household confidence for Otago.
Interestingly though, people’s prospects of future profitability are considerably down. Also, while it is statistically true that Otago remains one of the most confident areas, the picture is that there is considerably less confidence than previously, and that for the last 3 quarters confidence is decreasing as it has across the nation.
All these factors are now being seen as warning signs to some. We are hearing more and more from national and international experts that we need to start looking more conservatively towards the future. Let’s hope that people are reviewing their personal and professional exposures as we would hate to see a repeat of the past when the tide goes out.