Multispeed SME Economy Highlights Policy Dilemmas and Opportunities - ScotPac
(10 October 2023 - Australia) ScotPac's latest SME Growth Index indicates a decidedly mixed outlook for SMEs and the wider market, reinforcing the fact that Australia’s economy consists of many different economies within one.
For the past decade, ScotPac has gauged the growth prospects and sentiment of Australia’s economic engine room twice a year through the SME Growth Index. The analysis is based on direct interviews with over 700 small business owners, CFOs and treasurers with annual turnover of A$1-20 million by East & Partners.
In the resource-rich states of WA and QLD an overwhelming proportion of Small and medium-sized enterprises (SMEs) are bullish about the future. But the picture is much bleaker in Victoria, with 69 percent of SMEs forecasting a decline in revenue to March 2024, and just 17 percent anticipating sales growth.
"SMEs, which account for 97 percent of all businesses in Australia employing nearly eight million people, represent a true barometer of the state of the Australian economy" ScotPac CEO Jon Sutton comments in The Australian.
"One thing is clear, Australian SMEs are resilient. Despite an environment of continuing high inflation and rapidly escalating wages and interest rates, a remarkable 57 percent of SMEs are predicting positive revenue growth in the next six months. The average rate of growth forecast is an even more remarkable eight percent; the strongest in a decade."
"But there is stark evidence that we have a two-speed economy at play in Australia. At the other end of the scale a record 32 percent of SMEs predicted their revenue would fall in the next six months, by an average of nine percent. This sentiment gap represents the largest divergence of revenue projections in the history of ScotPac’s SME Growth Index."
"In an uncertain economic environment, it is critical for SMEs to seek professional advice to best manage these challenges. But it is also incumbent on government at all levels to monitor SME growth sentiment and retain a level of flexibility in policy settings so that appropriate action can be taken as and where it is needed. Again, a good starting point would be seizing the jobs momentum in our regions by creating incentives for SMEs to relocate from areas plagued by population pressures. And to avoid a further erosion of confidence in Victoria, an expert working group with SME industry representation is urgently needed to design and deliver a meaningful package of support in struggling sectors."
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