The 2024 Director Sentiment Survey, a survey conducted by the Institute of Directors (IoD) and ASB, revealed an increase in confidence among company directors regarding economic prospects. The results showed that 52.2% of respondents anticipate an improvement in the economy over the next year, a notable rise from just 28.3% who felt similarly in the previous year.
28% expected a downturn in the economy, marking a decline from 56% in last year’s survey.
“I think there’s been a noticeable pickup in the mood, particularly on the economic front,” ASB chief economist Nick Tuffley said.
This 11th annual survey, which included responses from 1,240 participants over four weeks in August and September, reflects a rebound in optimism following a 0.5% contraction in GDP over the year leading up to June 2024.
Tuffley emphasised that directors are hopeful for better days ahead, likening their perspective to standing at the bottom of the cliff looking up.
“The economic slowdown of the past couple of years was extended due to the Reserve Bank holding interest rates high to combat inflation,” Tuffley stated.
“With inflationary pressures easing when this survey was conducted in August/September, there was an expectation that the Bank would allow interest rates to fall. We have seen that easing began with the cut to the official cash rate (OCR) from 5.25% to 4.75% in October, and the market is predicting further cuts. As interest rates continue to fall, directors seem to be anticipating an economic rebound.”
The survey has also found that the cost of living and inflation are the primary threats to the national economy, with 41.6% of directors citing it as a concern. This issue also ranked as the top risk in 2023, when it was identified by 44.5% of respondents.
For 2024, the next most significant risks are perceived to be challenges posed by the global economy (33.2%) and New Zealand’s low productivity (32.3%).
In terms of their own organisations, directors ranked cost of living and inflation as the third highest risk, with 10.6% citing it as a concern, following low demand and political/policy uncertainty.
The top organisational risk from last year, which was labour capacity and capability, dropped to fourth place at 10.1%, down from 20.6% in 2023.
Furthermore, technology and innovation emerged as the primary focus for directors in 2025. However, artificial intelligence and digital acceleration ranked sixth among their current top strategic issues, with 25.2% of respondents highlighting it, which is only slightly up from 24.5% in 2023.
Strategy and growth ranked as the second most frequently mentioned focus area for the coming year, as directors aim for business expansion, market development, and improved market positioning in a recovering economy. When asked about current strategic issues, the top concern was balancing short-term viability with long-term considerations, cited by 57% of respondents.
“This suggests that, despite the increased optimism, directors are paying close attention to market conditions and not getting ahead of themselves at this stage, which may explain why cost management and efficiency were the third most-mentioned future focus,” Tuffley commented.
The survey has also exposed a decline in the proportion of directors who believed their boards supported their governance development, with only 47.9% indicating that there was a culture of continuous learning for directors, a decrease from 49.1% in 2023.