Macro economics affects us all, right down to small and micro businesses, that typify the Sign and Display industry. The International Monetary Fund (IMF) says Australia's inflation outlook is sobering. The AiG points the blame on the current government's high spending and neglect of productivity incentives. Meanwhile, business failures soar.
ASIC's sobering data. 'Engine room' of economy, NSW, is worst hit
Prelude
ASIC data shows a 39% increase in companies entering external administration in FY 2023-24 on the previous corresponding financial year. Astonishingly, restructuring appointments administered by Australia's approx, 690 registered liquidators increased by over 200%. Such number have not been seen since the post GFC years of 2012-13. Australia's dismal economic environment, high interest rates and plumeting productivity are major influencers but, implies the AiG, the government is asleep at the wheel and continues to spend with reckless abandon.
“The IMF’s outlook for Australian inflation is a sobering reminder that Australia’s inflation fight is far from over and reinforces the need for governments to rein in their spending which is prolonging the pain,” says Ai Group Chief Executive Innes Willox.
“Undoubtedly the worst of the inflation spike is behind us, but the IMF forecast makes it clear that much of its long tail is home grown. The forecast reinforces two things – that Australians should not expect any short-term relief from the cost of living burden and they will be suffering higher inflation and paying higher interest rates for longer than many of our competitors."
Willox adds: “The Reserve Bank’s approach has meant we have seen lower interest rates than many other developed economies but the flip side is that our relatively elevated rates will be with us for longer. Data around employment and unemployment will be key watch points in the months ahead. It is unfortunately likely that unemployment will have to edge up further before we see interest rate relief. That the Government-funded public sector is adding jobs at a furious pace is undoubtedly complicating the inflation fight.
Time to stop talking and act?
“Governments, both state and federal, need to take their eye off the political prize and think about the future of everyday Australians – because they live beyond the next electoral cycle. Geopolitical risks are also impacting the inflation fight. Members are reporting significant increases in shipping and container costs as the global economy prepares for ongoing disruption.
Willox fires a last salvo: “The obvious thing to tackle is our lackluster productivity growth which is as flat as a pancake - stop talking about it and start doing something about it,” he says.
