Grant Thornton International’s latest wave of research from its International Business Report (IBR) revealed business optimism in Australia is at its highest since 2011 – with 83 per cent of businesses stating they are optimistic about the outlook for the Australian economy over the next 12 months.
These positive results are despite the highest inflation rates seen for decades as businesses across the globe and in Australia take significant steps to adapt to yet another challenging business setting. The Australian data shows local businesses are turning their attention inward, with 31 per cent focusing on internal efficiencies, and 30 per cent on product differentiation in an effort to protect their business against the results of rapidly rising inflation.
While the research tells us business optimism is currently at its highest, businesses are still coping with pressures from rising wages, transportation costs, and rising energy costs.
Australian businesses identified infrastructure and energy costs as the main contributors to business stressors, with 55 per cent saying transport infrastructure is a major concern, and 50 per cent identifying that energy costs were constraining their business operations. Australian businesses estimate that energy / utility costs and transport costs have both increased by 19 per cent in the last 12 months alone.
Finding and retaining staff was also a key issue, with 46 per cent of businesses reporting labour costs concerns, and 42 per cent said the availability of skilled workers was a challenge.
Michael Pittendrigh, National Managing Partner – Consulting and Private Business Tax & Advisory at Grant Thornton said, “As the Australian economy suffers another blow from rising inflation and subsequent hikes in interest rates, businesses and consumers are both feeling uncertain leading to some tightening of the belt and looking for ways to reduce spending.
“The results of Grant Thornton’s IBR research shows that Australian businesses who are innovative, improve internal efficiencies, and look for opportunities to diversify their offering will weather this economic downturn. We have identified key areas which businesses should scrutinise to remain successful during this challenging operating environment including paying close attention to cash flow, reducing day-to-day costs, and looking for ways to increase productivity.”
Source: Grant Thornton