(13 November 2024 – Australia) Australia’s economy remains resilient despite high interest rates and costs with many small businesses planning to grow and invest according to newly released ScotPac research.
ScotPac’s latest research conducted by East & Partners, reveals that many businesses remain optimistic. It found that over one in two SMEs are projecting business enterprise growth (56 percent) by as much as 17 percent in the six months to March 2025. In contrast, one in three expect a decline in revenue (34 percent) of as much as 28 percent.
Despite plans for growth, the research found that businesses are still hurting. Indeed, 49 percent said they have been “very negatively” affected by rising wages and super; 20 percent want new staffing laws and changes relaxed; and 18 percent name company tax cuts as top of their wish list.
“While a small but rising share of Australian households are falling behind on their mortgage repayments, the vast majority of borrowers continue to be able to service their debts and most have maintained, if not added, to their mortgage buffers” the Reserve Bank of Australia (RBA) notes in its September Financial Stability Assessment.
“Many businesses also continue to manage pressure on their cash flows and balance sheets, supported by their strong financial positions prior to the rise of inflation and interest rates. Still, business conditions remain challenging for many firms, especially small businesses.”
“Business insolvencies have increased sharply over the past couple of years following the removal of pandemic-era support, though they are only slightly above pre-pandemic levels as a share of all businesses.”
“Stress on households and businesses would be magnified if economic conditions deteriorated further than anticipated and/or if inflation and interest rates were to remain high for longer than expected. However, the strong financial position of many businesses should help limit the risk of widespread financial stress if the economic environment deteriorates by more than expected” the RBA cautions.