The Institute of Directors (IoD), together with ASB, reports in their annual Director Sentiment Survey that 55% of directors expect the economy to improve over the next 12 months, up from 52% last year and 28% in 2023.
“This is the highest level of optimism about the prospects for the national economy that we have seen since the survey began in 2014,” IOD general manager Guy Beatson said.
“Despite the improved outlook, boards continue to prioritise cost control, cash flow and productivity, reflecting uncertainty about the pace of recovery.
“Directors are planning for steady recovery rather than rapid growth, with resilience and operational discipline top of mind.”
ASB Chief Economist Nick Tuffley noted the most significant change was the drop in directors anticipating the economy to decline, with 18% expecting a downturn compared to 28% last year.
Tuffley attributed the improving outlook to two key factors: “One is the lagging impact of past and future interest rate declines, which will increasingly support household spending, the housing market and, eventually, construction.
“The other is the good run of export incomes in some key industries, although the fruits of this are likely to be gradual in coming through and concentrated in particular regions rather than felt nationwide.”
Regarding risk management, boards showed growing confidence, with 69% stating their systems were adequate, although certain areas like succession planning still required further focus.
46% of boards consistently assessed physical climate risks like storms and floods. 20% of boards monitored modern slavery risks, while privacy oversight was still limited, with only 57% of directors evaluating data protection risks.
“It seems awareness is ahead of action at this point in some of these more recent and fast-moving areas,” Beatson said.