- New survey shows two-thirds of small businesses expect to grow this year.
- More small businesses think the economy will shrink than to grow.
- Double-dip recession increasingly likely for New Zealand.
More New Zealand small businesses think the economy will shrink than grow in 2023 despite most expecting to their own business to grow. That’s the surprising finding from a new survey by one of the world’s largest professional accounting organisations.
CPA Australia’s 2022-2023 Asia-Pacific Small Business Survey found just 40.3 per cent of New Zealand businesses surveyed expected the national economy to grow. This was the second lowest result among the 11 Asia-Pacific economies CPA Australia surveyed.
More small businesses (43.2 per cent) expect the economy to shrink in 2023. This is an even gloomier outlook for New Zealand than during the height of the COVID-19 pandemic (37.7 per cent expected the economy would shrink in 2021).
However, 65.6 per cent expect their own business to grow in 2023. Last year, 56.1 per cent were expecting growth. The number of small businesses in New Zealand that reported growth in 2022 (59.7 per cent) was well up on 2021 (33.2 per cent).
“Small businesses are expecting sunshine despite the gloom. It’s a surprising but positive result given small businesses’ relative pessimism about the New Zealand economy,” said Rick Jones, CPA Australia New Zealand Country Head.
“It seems probable that we’re looking at another recession so soon after the 2020 recession. There has been a flow of negative news since the survey was conducted, which means these figures are possibly more positive than the current sentiment.
“We’ve had natural disasters, persistently high inflation, a worse-than-expected GDP result for the final quarter of 2022 and further interest rate rises.
“That may have taken some of the gloss off business owners’ confidence in the performance of their own businesses and contributed to pessimism about the New Zealand economy.
“The percentage of small businesses saying rising costs had a major negative impact on the business increased to 37 per cent last year, from 28.7 per cent on 2021. We expect rising costs to continue to challenge businesses in 2023.”
The percentage of businesses reporting more than 10 per cent of their revenues came from online sales shrank to 35.7 per cent (from 40 per cent in 2021). This was the lowest result among the 11 economies surveyed.
New Zealand small businesses were the least likely to use social media for business purposes (34.1 per cent). Likewise, they were the least likely to offer digital payment options such as PayPal or Google Pay (42.3 per cent). They were the second least likely to use IT consultants and specialists (17.2 per cent).
“One possible explanation for the lack of digital take-up is the poor short-term returns businesses achieve on technology investment. Only 36.7 per cent of New Zealand’s small businesses reported their investment in technology last year improved their profitability. This was the third worst result of all the markets surveyed.”
New Zealand small businesses were the second least likely to seek access to external finance. The percentage of New Zealand small businesses reporting difficulty accessing finance increased last year.
Of those businesses that required external funds in 2022, 53.7 per cent said they found the experience difficult, compared to 18.4 per cent in 2021.
This difficulty is expected to continue this year, with 49.7 per cent forecasting the experience will be tough, well above the survey average of 27.4 per cent.
“Members are telling us that small businesses are having to jump through more hoops due to the requirements of the Credit Contracts and Consumer Finance Act, rather than seeing any tightening of credit availability from banks. The government should review whether the Act is having unintended consequences for business seeking to access finance.”
Nick Stride, CPA Australia, 027 813 6638 or [email protected]