Action needed to address a slowing economy

The Australian Industry Group’s latest CEO survey predicts deteriorating economic conditions for 2020 heightening the need for early action to stimulate the broader economy and for a determined effort to lift productivity.

Ai Group’s annual Business Prospects report for 2020 is based on a survey of 252 CEOs in late 2019. The results show that even before this summer’s devastating bushfires, Australia’s CEOs were pessimistic about business conditions for 2020:

• More CEOs anticipate a deterioration in trading conditions in 2020 relative to 2019.
• Fewer CEOs expect an improvement in their own turnover, profit margins and productivity in 2020 than for any year since 2015.
• As we enter 2020 a smaller proportion of businesses plan to increase their spending on capital investment and research and development, compared with the past two years.

Ai Group chief executive, Innes Willox, said, “While Ai Group’s latest survey reaffirms an immediate outlook for the economy that is flat at best, we can secure our future economic prosperity with timely and multifaceted action to address substantial headwinds. It’s a challenge for governments, for businesses and for the broader community, but it’s one we should rise to with confidence that we will emerge stronger.

“In part, this gloomier outlook stems from the disappointments of 2019. CEOs’ views also reflect uncertainties both in the global economy and those surrounding major areas of domestic policy, including energy, climate policy and the much-needed revival of national productivity growth.

“Another layer of concern arises from the fragile state of domestic demand in Australia, with both household and business spending indicative of the slow growth of domestic incomes (outside of the mining sector) and the pervasive mood of caution in both the business and household sectors.

“Australia’s extraordinary bushfires have further weakened the outlook for 2020. Considerable resources and effort will now need to be directed to recovering lost ground,” Mr Willox said.