18/12/2008 - 12:57

Australia to dip into recession: survey

18/12/2008 - 12:57

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More than half of Australia's small business owners believe the country will dip into recession in the next two years, a survey has revealed.

More than half of Australia's small business owners believe the country will dip into recession in the next two years, a survey has revealed.

In the latest MYOB Small Business Survey, 53 per cent believed there was a chance of recession in the next 24 months, up from 40 per cent reported in the March 2008 survey.

Reflecting this concern, 58 per cent of owners expect the economy to worsen in the next 12 months, up from 59 per cent in September 2008.

"The global economic events of the past three months have started affecting the confidence of small business owners and increased their fears of a recession," MYOB chief executive Tim Reed said.

"The current survey results do show an increase of 10% in 'unsure' responses from small business owners when asked about a possible economic recession, perhaps mirroring the current level of economic uncertainty across Australia."

In spite of this future outlook for the Australian economy, small business owners remain confident about the current performance of their own business with 73 per cent feeling that their business is currently performing well.

However when thinking about the performance outlook over the next 12 months, only 44 per cent of small business owners surveyed believe their revenue will increase over the next 12 months, down from 53 per cent in September 2008 and 58 per cent in June 2008.
"While small business owners have indicated they are confident with their business's current performance, they are now becoming more pessimistic about their future," says Mr Reed.

"With this decline in performance outlook for small business owners, the recent Federal Government announcement of a 20% cut in the next quarterly PAYG tax instalment for small business owners will be a welcome relief," says Mr Reed.

While just under half (47 per cent) of small business owners surveyed report a poor contribution to the development of small business by the Federal Government, there has been a 9% decline in this negative performance rating of the Federal Government since September 2008.

"The announcement of the December economic stimulus package made in October, combined with the interest rate reductions seem to have shed some positive light on the Federal Government and contributed to the improvement in this negative rating," says Mr Reed.

Considering the current economic issues, small business owners surveyed indicated they are most concerned about business costs, petrol prices, business profit and cash flow.

However there are still healthy levels of optimism, and, despite all the concerns for the economy and business costs, about half of all small business owners surveyed maintain a positive outlook for sales, customer relationships and profitability.

By their nature small businesses are more flexible and can react more easily to changing business conditions than larger businesses.

While the majority (88 per cent) of small business owners surveyed believe it is important to plan for a potential recession, only 29 per cent have actually sought advice on recession planning.

"Small business owners who are concerned about their business weathering any kind of economic storm should seek professional advice from a financial adviser or accounting professional. They can assist with business planning, shed light on areas of belt tightening and help with 'what if' scenarios that a business owner may not have considered," Mr Reed said.

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