New GDP figures ‘paint grim picture’ for businesses
The reflection of weak economic growth in the new GDP data will directly expose businesses to even tougher conditions and challenges, industry professionals have said.
Recent Australian Bureau of Statistics (ABS) data highlighted GDP growth had only experienced a slight uptick, indicating the weakest annual economic growth since 1991 outside of the global pandemic.
The Business Council of Australia (BCA) said Australia’s economy is stalling and in need of better business conditions.
Without stimulated growth, businesses will continue to struggle in the current economic climate which will contribute to the increased insolvency rates.
BCA chief executive Bran Black said Australia was missing out on investment and economic growth because of increased red tape regulation, an inefficient tax system, and uncertainty around project approvals.
“Outside the pandemic, this is the worst growth since the 1990s recession and it means the government must act now to fix the basics so we can get more businesses to invest in Australia,” he said.
“I constantly hear from CEOs that Australia is missing out on major investments because of our planning and regulation systems and the many duplicative taxes.”
According to BCA, the weak GDP growth will give businesses the impossible task of having to hire more workers and increase their hours in order to lift output.
The Australian Chamber of Commerce and Industry (ACCI) said the June quarter economic growth figure of 0.2 per cent highlights the cost-of-living pressures impacting household budgets, which then impact businesses.
The quarter of negative productivity and rising labour unit costs paint a grim picture for business conditions in Australia, according to ACCI.
ACCI’s chief of policy and advocacy, David Alexander, said the expectations on businesses to “keep up” in this economy need to be changed.
“Declining productivity, coupled with rising labour costs and falling profits, show just how tough conditions are for business,” he said.
“Businesses are suffering falling profits and higher costs, and yet they are expected to fund an ever-growing public sector. This is a recipe for further economic problems down the track.”
ACCI noted the way to get the economy “back on track” is to lift productivity by moving to more flexible workplace relations arrangements.
The National Australia Bank (NAB) shared commentary on the weak economic growth and how this was induced by a lack of business investment.
NAB said the business investment deflator was 2.2 per cent year-on-year in the most recent quarter, which is the lowest it has been since mid-2021.
“Consumption was weaker than expected, while the other components were largely in line with the partials – business and dwelling investment made no contribution while net exports and public demand were key supports,” the big four bank said.
All bodies stated it is unlikely for Australian businesses to experience any relief in the current economy until the RBA stage three tax cuts filter through to household spending and consumption.
