World Economy

Australia’s Small Firms Worry About Economic Uncertainty

Small businesses feel more confident in their debt repayment capacity and industry outlook.Small businesses feel more confident in their debt repayment capacity and industry outlook.

Sentiment among Australia’s small and medium businesses is in neutral, dampened by worries about the economy. A new quarterly survey, the Bankwest Future of Business 2017 Outlook Report, gauges expectations among small to medium businesses for their overall prospects, health, performance and the economy to establish.

A part of the report shows sentiment is hit by perceived economic uncertainty both at home and abroad, Business Insider reported.

Optimism about their debt repayment capacity, business prospects and industry outlook in the next three months has been offset by concerns over the Australian and global economies.

“This trend is apparent for both small and medium businesses,” says Sinead Taylor executive general manager, business banking Bankwest.

“However, key differences lie in sentiment towards business performance, with medium businesses displaying significantly greater optimism than small businesses for both revenue and profit expectations and small businesses more confident in their debt repayment capacity and industry outlook.

“Despite the economic uncertainty, Australia’s small and medium business sector remains in good shape. Three quarters are confident in their overall prospects in the next three months, and close to half expect an increase in revenue or profit.”

The findings in the report are based on a survey of 500 business owners, leaders and managers, conducted by CoreData in December 2016.

  Economy Contracts

Australia’s economy has contracted for the first time in five years during the September quarter, according to the Fiducian Group, a specialist financial services organization, MoneyManagement reported.

Fiducian investment manager, Conrad Burge, said the country’s international competitiveness had been eroded in recent years.

“This was by a move back towards an inefficient, union-dominated labor market in some sectors, relatively high corporate tax rates and over-regulation that had pushed up costs, while a stubbornly high currency might require further reductions in official interest rates,” he said.

Burge said while private investment declined for the seventh quarter in a row, prices for major commodity export items rose, pushing up the terms of trade.

He said the global economy was forecast by the International Monetary Fund to grow a little more strongly this year (up 0.3% to 3.4%) but it was the developing world that continued to be the driving force behind global growth.

“Amongst the advanced economies, the US is forecast to grow by 2.3% in 2017, the eurozone by 1.6% and Japan by only 0.8%,” the firm said.

“This persistently low rate of growth across the developed world reflects underlying problems in most advanced economies, notably a low propensity to invest and historically low rates of productivity growth.”

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