Comment: New Zealand businesses have had a tough start to 2026. Company liquidations have continued to rise. Inflation is sitting at 3 percent and projected to climb. And the ongoing conflict in the Middle East, which is threatening oil and gas supplies globally, is putting further pressure on the costs of doing business and dampening economic activity.
Despite this, business confidence isn’t in the doldrums. The ANZ Business Outlook survey for March reports a net 33 percent of respondents expecting general business conditions to improve in the next 12 months. That’s down from 59 percent in February, but it’s a far cry from the negative numbers (-50 percent) seen at times over the past decade.
Given the struggling economy and an ongoing fuel crisis, why are so many business leaders optimistic about the year ahead?
Business confidence surveys are well known sources of economic information, often viewed as objective long-term measures of business sentiment about expected growth or decline. When news outlets report the results, they may present them as significant indicators of future economic conditions and government performance.
News audiences might assume rising business confidence means the economy is thriving, but it’s important to understand these surveys don’t measure the economy itself. Rather, business confidence measures how the business community feels about the economy. And our recent research suggests these feelings are strongly influenced by politics.
We looked at publicly available data from the OECD Business Confidence Index for the period from 1987 to 2024 and the ANZ Business Outlook survey from 2006 to 2024. We found business confidence was systematically higher under National-led governments, irrespective of the actual economic conditions.
Our modelling showed National-led governments were associated with a 39.9 percent increase in ANZ’s business confidence measure. This was after controlling for economic variables that may explain changes in business outlook—such as economic growth forecasts, employment levels, and foreign exchange fluctuations.
Of the nine variables we used in our modelling, only the unemployment rate and the US dollar exchange rate were positively associated with increased business confidence. Global economic policy uncertainty was associated with decreased business confidence.
But across all our models, it was a National-led government that explained most of the variation in business confidence over time—accounting for 41.5 percent of the variation in confidence in the ANZ Business Outlook survey.
Using data from the same survey, we also found National-led governments were associated with a 21.6 percent increase in business owners’ views of how well their own businesses would fare over the coming year (again, this was after controlling for other explanations).
This high-level optimism among business owners under National Party governance could be explained by two factors: policy expectations and partisan heuristics or biases—cognitive shortcuts or rules of thumb that inform what people think.
Typically, right-wing governments tend to prioritise fiscal restraint and promote economic growth, especially through creating favourable conditions for the private sector. So, we might expect business leaders to feel better about the future if they expect business-friendly policies to be delivered by the government of the day.
Previous research has also shown that partisan biases can influence how people respond to surveys. For example, they might interpret information in a way that favours their preferred party, selectively recall information, or give answers to signal political support.
Business leaders may be just as susceptible to seeing the economic future through a partisan lens. This might explain why business owners may feel better about their future because their preferred political party, National, is leading government—even if the economy is performing poorly.
Although the results of business confidence surveys provide important information about how business leaders feel, our research suggests these results are systematically influenced by the government of the day. These surveys provide useful insights into how the business community feels, but they’re not the best measures of economic performance.
Our findings suggest journalists and policymakers should exercise caution when interpreting business confidence survey results for the public. Journalists should aim to provide caveats about the limitations of these surveys and put the results in context.
With the 2026 election approaching, such caveats may help provide people with the detail they need to interpret survey results as well as assess government and economic performance.
This article was originally published on Newsroom.
Thomas Jamieson is a senior lecturer in Political Science and International Relations at Te Herenga Waka—Victoria University of Wellington, Merekara Below is a Master of Political Science student at the University, and Saskia Grant graduated in 2025 with a Bachelor of Arts in International Relations and a Bachelor of Communication in Political Communication. At the time of undertaking the research discussed in this article, Saskia worked as a research assistant at the university.