Australian executives are expecting further economic turbulence in the New Year as credit market conditions, a volatile Australian dollar and inflationary pressures impact profit and investment prospects for 2009.
Australian executives are expecting further economic turbulence in the New Year as credit market conditions, a volatile Australian dollar and inflationary pressures impact profit and investment prospects for 2009.
The latest Dun & Bradstreet business expectations survey, released today, shows that 26 per cent of executives have been negatively impacted by changing credit market conditions and 67 per cent have been hurt by the dramatic fall in the value of the Aussie dollar since July.
Wholesale businesses reported the largest swing from a net 31 per cent positive in July to a net 67 per cent negative in the current survey.
Despite a 25 per cent decline in the number of businesses impacted by recent movements in petrol prices, 68 per cent of firms indicated that fuel costs were having a detrimental effect on operations.
D&B, a global provider of business-to-business credit, marketing and purchasing information and receivables management services, expects the employment growth index for the March quarter 2009 to remain in negative territory, despite a three-point rise on the December quarter 2008.
Damian Karmelich, director of marketing and corporate affairs at D&B, today said sales and profits expectations were expected to dive further into negative territory next year.
"The sub-prime lending crisis is having significant detrimental impacts on developed and emerging economies throughout the world and Australia has not escaped the fallout," he said.
"The credit crisis has made it more difficult for Australian businesses to access funds - it has also caused significant volatility in the Australian dollar. As a result, executive confidence has declined sharply, with expectations falling to levels not seen since the 1990s.
"Economic conditions will remain challenging for some time, however, we expect than Australian businesses will weather the current turbulence better than other nations."
The D&B survey showed that inflationary pressures are set to continue into 2009 with 81 per cent of executives indicating they will raise selling prices in the March quarter next year.
Selling price expectations have risen by 34 per cent over the past nine months to reach the highest level ever recorded by the survey. Now at an index of 79, this indicator is the only index in positive territory.
Dr Duncan Ironmonger, D&B's economic consultant, said although GDP growth will be lower in 2009 than it has been over the past few years it will remain positive.
"The federal government will provide further fiscal stimulus as necessary and the lower value of the Australian dollar will encourage domestic spending and exports whilst discouraging imports," he said.
"This situation will help to maintain domestic production and jobs, with unemployment expected to stay below 5.5 per cent in 2009.
"Despite the slowdown in world growth Australia will not experience a recession. However inflation will remain above the Reserve Bank's target band of 2-3 per cent and this may delay a further reduction in official interest rates this week."
