Australian Industry Group survey shows businesses are braced for slowing economy
His wish list includes lifting productivity with skills and training, reducing payroll tax and WorkCover premiums, supporting technology investment through incentives and write-offs, putting downward pressure on energy costs, and reducing barriers to employment and to paying bills on time.
Business leaders say while the outlook remains net positive for revenue, employment, margins, investment and technology, the forecast growth is low with all indicators at or near their lowest levels in a decade.
Australia’s economy grew just 0.2 per cent over the three months to September 30, and 2.1 per cent over the past year, according to National Accounts data from the Australian Bureau of Statistics in December.
Concerns over belt-tightening, port problems
The Ai Group survey shows 40 per cent of industry leaders expect business conditions to be weaker in 2024 than last year, while only 27 per cent expect them to be better. Net optimism was minus 13, the lowest score in the survey since the end of the mining boom more than a decade ago.
“The key worries from industry leaders for 2024 are heightened uncertainty driven by our geopolitical environment; ongoing supply side constraints, especially inflation and labour shortages; and weak demand, driven largely by households tightening their belts as their disposable income shrinks,” Mr Willox writes.
The survey identified three factors – uncertainty, ongoing supply side constraints and weakening demand – as the main inhibitors this year.
“Conflicts and blockages of key supply routes to Australia, combined with our own difficulties facing our ports, are rekindling concerns that supply chain pressures will keep inflation higher for longer this year and next,” Mr Willox writes.
Supply chain strategies will shift from managing disruptions to controlling costs; 78 per cent expect their input prices to rise this year, but only 57 per cent plan to raise prices.
Growth strategies will focus on the product offering, and most leaders intend to introduce new products and services or improve their current offerings. There is a clear preference for developing Australian over international markets, given lingering uncertainties about the global environment.
Investment efforts will focus on productivity over growth. Business process improvement and staff training top the investment priority list for 2024.
Technology and innovation will be a top priority for leaders this year, the survey found – either to drive cost savings in the face of inflation and rising wages or to find new markets in a slowing economy.
Staff shortages will also continue, with 87 per cent of industry leaders expecting to be affected.
To manage labour supply risks, business leaders plan to invest in training, increase wages and benefits, and change operational processes to lower labour demand.
