The latest ANZ Business Outlook Survey for March revealed a notable decline in business confidence, with recorded levels dropping by 12 points to +23. Similarly, both the expected own activity measure and past activity figures saw decreases, indicating a general sense of unease among businesses.
ANZ Chief Economist Sharon Zollner emphasized the impact of the GDP data on business sentiment, noting a perceptible shift towards pessimism following its publication. Zollner highlighted a correlation between reported past activity and GDP figures, suggesting that while the economy may still achieve modest growth in the first quarter, the overall sentiment remains subdued.
The survey findings paint a nuanced picture of sectoral performance, with construction experiencing the most significant decline in activity, closely followed by retail. Despite this, Zollner observed a glimmer of hope in the retail sector, attributing it to robust population growth despite consumer wariness.
Commenting on the survey, Westpac senior economist Satish Ranchhod echoed concerns about increasing nervousness within the business sector. Ranchhod pointed out weaknesses in retail, construction, and manufacturing, coupled with a decline in businesses’ expectations for future trading activity and investment.
Overall, the survey aligns with expectations of soft activity and slowing inflation. Ranchhod stressed the importance of monitoring inflation trends moving forward, highlighting uncertainties surrounding the inflation outlook amidst economic slowdown.
Zollner noted that the economy’s trajectory mirrors the path set by the Reserve Bank, characterized by deliberate measures to engineer a recession. Despite the challenges, Zollner emphasized the potential for a more sustainable external balance and stable inflation rates once the adjustment period concludes.
Acknowledging the necessity of curbing unsustainable fiscal and current account deficits, Zollner underscored the inevitability of facing economic repercussions. However, amidst the downturn, signs of progress emerge, with the current account deficit narrowing and inflation trending downwards.
Despite lingering uncertainties, Zollner remained cautiously optimistic, emphasizing the importance of staying focused on long-term goals. While challenges persist, progress towards economic stability and sustainable growth indicates a path forward, albeit one fraught with obstacles.
In conclusion, while the ANZ survey reflects prevailing concerns amidst economic headwinds, it also highlights resilience and progress towards a more balanced and sustainable economic landscape. Vigilance and strategic planning will be crucial in navigating the uncertain terrain ahead. As businesses adapt to evolving market conditions, maintaining flexibility and resilience will be key to weathering the storms and emerging stronger on the other side.
Contact Accountancy Insurance
We would love to hear from you.
About Accountancy Insurance
Thousands of accounting firms offer our tax audit insurance solution, Audit Shield to their clients. Find out why.