If interest rates are a problem now . . .

An MYOB survey of rural businesses identifies major pressures:

Top 5 pressures for the primary sector in next 12 months

Pressure % of SMEs
Fuel prices 58%
Exchange rates 41%
Cashflow 35%
Interest rates 31%
Finance 25%

Interest rates are at historically low levels and are expected to go up next year but not significantly.

If that’s a concern now these businesses won’t want a change of government because policies announced so far by opposition parties would lead to much higher interest rates.

Fuel prices and exchange rates are also an issue – but a lower exchange rate would make imports, including fuel, more expensive.

New Zealand’s rural sector continues to find the going tough as it faces a high dollar, uncertain international markets and rising production costs. However, things are looking up, with more than double the proportion of SMEs expecting an annual revenue rise as had experienced one in the prior 12 months.

This is the finding of the latest MYOB Business Monitor, in which 39% of SME operators in the agriculture, fishing and forestry sector reported falling annual revenue, while only 15% saw revenue increase in the year to August. The sector’s growth was half the pace set by all SME’s surveyed, where 30% saw revenue increase.

MYOB General Manager Business Division James Scollay says the survey underscores some of the complex challenges facing the industries that lie at the heart of New Zealand’s economy.

“While there is much to be positive about for the SME sector as a whole this year, it has without a doubt been a more testing time for rural business operators. There’s good news on the horizon though, with 37% of agriculture, forestry and fishing SME operators expecting their revenue to increase in the next 12 months.

“A further 46% expect revenue to remain stable, while just 7% are forecasting a fall in revenue in 2014. The latter was the lowest proportion across all the industries we surveyed, along with finance and insurance.

“What this says is that although things haven’t been as good as we might have hoped in 2013, the primary sector seems set to turn a corner and enjoy a return to growth in 2014.

“We need to be mindful that the vulnerability from key pressures – many of them external – is still there, with rural business operators wanting more support, especially around the dollar. However, revenue is definitely heading in the right direction.” . . .

This gloomy view on the past year must be in areas where the drought had such a big impact.

It certainly doesn’t reflect sentiment in the south where business is going well and the forecast for the coming season is bright.

It’s certainly bright in #gigatownoamaru as it works to be the southern hemisphere’s first gigatown.

One Response to If interest rates are a problem now . . .

  1. Armchair Critic says:

    There’s a disconnect between the title of your post and its content.
    If interest rates were a problem now they would be at or near the top of the list of problems in the post. As it is, apparently they are fourth. Any lower and they’d be in the bottom 20% that Hekia Parata pretends to care about.
    So, how do our interest rates compare internationally? They’re comparatively high. But Bill English prefers economic settings that punish exporters (lucky we’re not an exporting nation) through a high exchange rate. Which is why “the exchange rate is up there as one of the important issues.
    Your post clearly demonstrated that small business owners tend to vote National based on reputation and hyperbole, rather than demonstrated ability or competence.

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