N.Z. Business Confidence Has Largest Drop Since 1984 (Update2) By Tina Morrison

Wellington, Oct. 11 (Bloomberg) -- New Zealand business confidence had its biggest fall in 17 years in the third quarter, with most firms pessimistic about the outlook for exports.

A net 44 percent of companies surveyed expect business conditions to deteriorate in the next six months, the New Zealand Institute of Economic Research survey showed. It's the first survey since the Sept. 11 U.S. terrorist attacks. A net 1 percent of firms expected improvement in the second quarter.

The survey is considered a leading indicator of economic growth, which is expected to fall after expanding 2 percent in the second quarter, its fastest rate in almost two years. Falling business confidence increases the likelihood the Reserve Bank of New Zealand will cut interest rates next month.

``Business confidence has clearly been rocked by the terrorist attacks on the U.S. and the uncertainty surrounding the economic outlook since these events occurred,'' the report said. All survey responses were received after Sept. 11.

Confidence in the third quarter had its largest decline since a currency crisis in June 1984, the report said. It's the lowest level of confidence since September last year. The net figure subtracts those who expect conditions to worsen from those who expect improvement.

-- Guy Daley (guydaley1@netzero.net), October 10, 2001