Kiwi R&D investment doubles despite business pessimism

Kiwi R&D investment doubles despite business pessimism

Investment in technology is also starting to follow suit

New Zealand business leaders are becoming less confident about the economic outlook with optimism falling from 76 per cent to 60 per cent in the space of a quarter.

According to Grant Thornton findings, such figures are consistent with the global average which has fallen from an all-time high of 61 per cent during the first quarter of 2018, to 54 per cent in the second quarter.

“These figures tell us that although there’s some anxiety about the economy, a lot of business leaders are still doing well and making all of the right moves to future proof their operations,” observed Paul Kane, partner of business advisory services at Grant Thornton New Zealand.

Despite a dive in Kiwi optimism between the opening quarters of the year, Kane said investment in research and development has doubled, growing from 26 per cent to 50 per cent.

The growth follows the $1 billion earmarked for R&D during this year’s budget.

Meanwhile, investment in technology is also starting to follow suit, and expectations for employment also leapt to 60 per cent from 46 per cent.

“The R&D investment figures are particularly promising, because although there’s a tax credit regime in the pipeline, business owners know they will still have to invest in further resources and technical abilities to meet the Government’s requisite standards,” Kane said.

“Businesses don’t make this sort of commitment if they’re not confident they can pay the bills.

“New Zealand businesses look to be taking the opportunity to invest, but they will need to make sure they are investing to a level which will help them ride out the economic shift predicted in the future.”

Kane said “strategic investment” is the way forward for businesses in New Zealand, but overseas research suggests that businesses aren’t taking steps to counter the risks that this lack of investment presents.

As a result, Kane said such businesses should be taking advantage of the rising revenues the global economy recovery has provided to invest for long-term structural growth.

“There is a sense that 2018 may be as good as it gets for the global economy,” he added.

“The bottom line for businesses is to ensure they can still make hay as the sun sets over what has been a boom during the last few years; history tells us it’s just around the corner.”

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