A survey released this week by ANZ National Bank has shown that New Zealand business confidence has reached a 10-year high, confirming reports that the country’s economy is on the road to recovery. 

The results have shown that a net 36.9% of companies are expecting sales and profits to increase over the next 12 months. In November, the figure was at a more modest 33.7%.

“The scene is set for a respectable upswing across the economy,” stated Cameron Bagrie, chief economist at ANZ National in Wellington, as quoted by Bloomberg[jm2] . “Proven evidence in the so-called hard data is required over the coming months. Intent must be matched by reality.”

The survey has also shown that companies remain cautious when it comes to hiring and making new investments. A net 38.5% of companies surveyed expect the economy to improve, a number that is down from the 43.4% result in the November survey. 

Reserve Bank Governor Alan Bollard had already announced that the economy is expected to grow 3% next year and that growth will climb to 4.1% in 2011.

While business confidence is improving, and since inflation isn’t accelerating and companies’ spending is still weak, the central bank does not intend to raise borrowing costs. 

As for profits, 38% of companies expect earnings to increase, against 21% who expect a decline.