There has been a 41 percent drop in optimism among Australia’s privately held business owners over the last year, with falls in consumer spending and rising interest rates the cause according to Grant Thornton Australia’s International Business Report (IBR).
Tony Markwell, National Head of Privately Held Business, Grant Thornton Australia said that while Australian business owners are more optimistic than their international counterparts, the decline in consumer spending as interest rates increased last year has dented optimism levels.
“While Australia’s optimism is still well above the global average at 38 percent, the survey highlights a significant decline which is a far cry from last year’s soaring confidence of 79 percent. Increases in interest rates, declining property market values, current export conditions, and employment rates have contributed to the decline in confidence among Australia’s privately held business owners,” said
“Last year expectations were high as most business owners believed that Australia had, for the most part, managed to avoid the global financial crisis. With soaring confidence in 2010, many businesses were not prepared for the mildly bumpy ride experienced throughout the year as the affects of the crisis trickled through to our economy.”
Uncertainty in the property market has also contributed to the decline in optimism among Australian business owners.
“Declining property values are putting businesses under pressure as banks and financiers look to secure their investments,” said Markwell.
Tony Markwell said Australia’s privately held business owners hold concerns about the challenges faced by the economy’s export sector.
“Confidence in Australia’s exports is down from 16 percent in 2010 to just seven percent this year and is a major contributing factor to the overall decline in optimism. Many Australian exporters have suffered over recent months as the Australian dollar has continued to strengthen against the US dollar.
“This sentiment is likely to persist as indications show the American dollar will continue to lose dominance on the global stage for quite some time,” said Markwell.