Economic optimism reaches new heights, survey reveals
Confidence in New Zealand’s economy has nearly doubled among directors, according to the 2024 Director Sentiment Survey by the Institute of Directors (IoD) and ASB.
The survey reveals that 52.2% of respondents expect economic improvement over the next 12 months, a significant jump from 28.3% in 2023.
“Last year’s economic pessimism has been replaced by the highest level of national economic optimism since the survey began in 2014,” said Guy Beatson, general manager of the IoD’s Governance Leadership Centre.
Directors are also optimistic about their own organisations, with 58% confident about their performance, up from 47% last year.
Key risks: Inflation and policy uncertainty
Despite the optimism, directors remain cautious about key risks.
At a national level, cost of living and inflation remain the top concerns (41.6%), followed by global economic challenges (33.2%) and New Zealand’s low productivity (32.3%).
For individual organisations, directors identified low consumer demand (14.7%) and political/policy uncertainty (14.5%) as primary risks. Labour capacity, last year’s top risk, fell to fourth place at 10.1%, reflecting improved immigration and higher unemployment.
Technology and innovation lead future focus
Boards are increasingly prioritising technology and innovation for 2025, with directors citing AI and digital acceleration as areas of both opportunity and risk.
“Short-term financial pressure is driving discussions about technology,” Beatson said. “Directors see AI as a tool for growth but remain cautious about its risks.”
Good governance still a concern
While optimism is high, the survey highlighted concerning trends in governance practices. Only 46.9% of boards conducted formal evaluations this year, down from 50.2% in 2023.
“Fewer than half of directors believe their boards have the right skills to handle rising risks and complexity,” Beatson said.
Additionally, only 27.2% of boards have processes for addressing underperforming members, a significant governance gap.
Looking ahead
ASB chief economist Nick Tuffley (pictured above) attributed rising confidence to easing inflation and interest rate cuts.
“With inflation pressures easing and interest rates falling, directors are anticipating economic recovery,” Tuffley said.
However, Tuffley emphasised that directors remain pragmatic.
“Cost management and efficiency remain priorities as boards focus on balancing short-term challenges with long-term growth,” he said.
The 2024 survey underscores the need for continuous learning, strategic foresight, and stronger governance practices as directors prepare for the opportunities and uncertainties ahead.
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