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Confidence at record high, but BNZ warns optimism not enough

Tuesday 7th June 2011

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Confidence in the economy has reached a five-and-a-half year high, according to the BNZ Confidence Survey.

The survey found a net 57% of respondents expect that the economy will be better in a year's time, well up from May's net 42% positive and the third consecutive month of improvement.

"In fact in the five-and-a-half years during which we have been running the survey sentiment has never been this high," said BNZ.

The survey of more than 25,000 BNZ Weekly Overview readers found one theme was of expectations of stronger activity related to the Christchurch rebuild.

The Rugby World Cup is also cited as providing a boost to the economy.

"The survey results suggest it remains reasonable for businesspeople in New Zealand to plan (generally) for better times ahead."

However, the bank also sounded a note of caution.

"Soaring optimism is not a sufficient condition for strong growth. After all, the strong lift in early September 2008 came right before the global financial crisis, and last year’s firm confidence up until June did not correlate with the fact that during that quarter the economy almost shrank."

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