Continued political uncertainty in Australia could have a negative impact on New Zealand businesses says leading online accounting software provider MYOB.
Australia remains New Zealand’s top export destination taking almost $13 billion of our goods and services in the year to March 2016, while imports totalled $11.2 billion.
“With the outcome of Australia’s federal election still unknown, the economy here will start to hurt if political deadlock there translates into business uncertainty,” says MYOB NZ General Manager James Scollay.
“Many people had hoped the election would deliver a result that would set Australia up for a new period of political stability. This is important, because political stability leads to economic confidence, and economic confidence leads to business investment.
“That decisive result didn’t happen, meaning the ongoing uncertainty created by the election and the possibility of a hung parliament or weak minority government will loom large over business confidence.
“Why this matters to New Zealanders is that when Australian businesses and consumers are doing well, they are much more likely to buy New Zealand products and services, come here on holiday and invest in local firms.”
“MYOB operates only in Australia and New Zealand. As a business dedicated to Australasia, we know that happens in one country can have a profound effect on the other.”
The difference in economic outlook can be seen in the last MYOB Colmar Brunton Business Survey of more than 1,000 SMEs in both Australia and New Zealand. In Australia, 42 percent of SMEs predicted that the local economy will decline over the next 12 months – a net negative result of 18 percent.
In contrast, small business confidence in the New Zealand economy improved markedly in the latest survey, up to net positive 5 percent from net negative 30 percent in September 2015.
“The Australian economy is hugely resilient. Just this past weekend Australia celebrated a remarkable quarter of a century without entering recession. Yet it still faces a number of headwinds including global volatility, reduced prices for iron ore and extracted minerals and now this.
“We might be used to Australian politics being in a bit of a mess, but New Zealand businesses will be hoping the country’s political crisis does not translate into an economic slowdown,” says Scollay.