Feature Articles
From 2012, we now list our articles in our Blog. Read the latest here
08/02/2010
2010: Good Year for Business
Economic conditions were better than expected in 2009 and 2010 is shaping up as being a good year for business. The Australian economy has been less affected than other major economies by the slowdown in global economic conditions. We have prospered where other economies have floundered due to our strong financial system, our exposure to the strong growing Chinese & Indian economies and the rapid response of the Reserve Bank to the crisis.
Domestically, business investment is again back to high levels, particularly in the mining and resources sector (Western Australia and Queensland). However, many businesses still remain cautious regarding increasing their capital spending, mainly due to lingering fears relating to the global financial crisis and bad memories of the 1991 recession.
Yet, recent business confidence and employment data has been very positive. Many businesses anticipated an increase in demand in late 2009, resulting in employment growing strongly during the final months of 2009. Additionally, average hours worked by full-time and part-time employees increased during the December 2009 Quarter, after having fallen for most of 2009. The Reserve Bank has noted that the unemployment rate in Australia appears to have peaked at around 5.75% and now may fall.
The recent employment data has boosted consumer confidence which, when combined with a recovery in household wealth, has supported consumer spending, despite the diminishing of the effects of the Federal Government’s stimulus package. All forward-looking indicators are suggesting solid business and employment growth during 2010.
There are always risks, and the main risks to our economy in 2010 will be two fold. The first risk is that the Chinese economy undergoes a significant slowdown. The second risk is that the North American and European economies slip back into recession. However, we remain optimistic and anticipate the Australian economy growing by between 3% and 3.5% in 2010.