Chamber chief executive John Christie acknowledges it is a "big call" to predict an upswing at present and cautions there is more pain to come during the next six to 12 months.
"We haven't seen the public face of business pain yet. Essentially, that is going to be more job lay-offs to come. It [recession] is not going to go away quickly," he said yesterday.
As the province had been through three negative consecutive quarters, it "may have seen the worst", and trends at least indicated a more optimistic outlook.
In the manufacturing sector, 64% of respondents believed the national business situation would deteriorate, while locally 32% believed their own business situation would improve.
The outlook for construction remained grim, however, with 56% of respondents expecting a national deterioration and 43% a local deterioration.
In the retail subcategory, 45% believed the national situation would remain the same, while for local retailing the figure was 54%.
Despite the closure of Fisher and Paykel Appliances, redundancies at Cadburys Confectionery, his own prediction of a decline in Christmas retail spending of at least 10% and unemployment higher than the survey consensus of 6%, Mr Christie said many of the survey's subcategory results indicated a trend towards recovery.
The chamber's all-sector quarterly business confidence survey released yesterday showed expectations for national and own business, employment of staff both skilled and unskilled and profitability - while still in the negative range - were at least heading in a positive direction.
"We have seen an economic climate change in what now makes up our economy. People and businesses have been making the adjustments," he said.
Those adjustments include a tightening of household budgets; a change in spending patterns in terms of retailers visited and brands purchased; the deferring of big-ticket purchases; and the trend towards repairing items rather than replacing them.
Food, fuel and energy costs hit consumers hard over winter and many would have relied on savings or credit to maintain levels of expenditure.
This would be reflected in retail spending figures for December as well as tourism as holiday plans were scaled back, he said.
With rising unemployment, businesses could find staff more easily, after a two-year shortage, but jobs would become a crucial factor in Otago, Mr Christie said.
"Unemployment will be the biggest issue facing our community in the year ahead," Mr Christie said.
The biggest drag on businesses was declining demand for goods and services, reflected in the survey by a drop in sales expectations.
However, offsetting these were incentives to growth yet to be fully felt, including falling interest rates, tax cuts and Government infrastructure spending, Mr Christie said.
Government spending on infrastructure, underpinning efforts to stimulate recovery, is forecast at $6 billion for 2009-10, rising to $9.2 billion by 2011-12.
Mr Christie said Dunedin was especially reliant on Government spending on health, education, infrastructure and social welfare, noting one in five residents was studying at the university or polytechnic.
While global commodity prices were falling, rural and hinterland income in the province remained a big contributor, Mr Christie said.
Despite the recent payout cut for dairy farmers for milk solids, down to $6 per kg, and yesterday's almost 20% cut in farmers' fair value share, he highlighted Otago's "strong" share of the expected overall $2 billion in payouts nationwide.
