WELLINGTON, Oct 31 (Reuters) - New Zealand business sentiment dropped to a two-year low in October as firms grappled with a turbulent political outlook, an ANZ Bank survey showed on Tuesday.
The survey's headline measure showed a net 10.1 percent of respondents expected the economy to deteriorate over the year ahead. It compared with a flat result in the previous month's survey.
"The finger can be pointed at political uncertainty," said ANZ chief economist Cameron Bagrie in a research note accompanying the data.
Most of the survey responses were sent in during a protracted coalition negotiation period led by the small nationalist New Zealand First Party after an inconclusive September election left neither major party with enough votes to form a government.
NZ First eventually cast the centre-left Labour Party in government on Oct. 19, ending almost a decade of centre-right National Party rule.
"This month's survey primarily covers the uncertainty around the outcome and not the outcome itself," Bagrie said.
The survey also showed a net 22.2 percent of respondents expected their own businesses to grow in the next 12 months, down from 29.6 percent last month.