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What Australia’s most powerful think of the economy

By Cameron Micallef · June 12 2019
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KPMG
What Australia’s most powerful think of the economy

What Australia’s most powerful think of the economy

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By Cameron Micallef · June 12 2019
Reading:
egg
KPMG

Recent economic forecasts have projected sluggish growth at best, and yet, Australian chief executives are taking a different world view.

According to the Global CEO Outlook survey from accounting and advisory giant KPMG, CEOs are aware of and forecast headwinds in their own industries, but that hasn’t necessarily dampened their outlook.

Confidence on the up

The survey shows that more than half of Australia’s CEOs are ‘very confident’ about their company’s prospects over the next three years. This represents a significant increase in CEOs’ confidence, as just 22 per cent of CEOs were ‘very confident’ about the future 12 months ago.

Their confidence extends to the wider economy, with 44 per cent of CEOs saying they were ‘very confident’ about growth prospects for Australia. Again, this is a significant increase, with just 20 per cent having a positive economic outlook in 2018.

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KPMG Australia’s CEO, Gary Wingrove, said CEOs remain positive about their positions in the market.

“Despite the current economic uncertainty – as reflected by the RBA’s interest rate cut yesterday Australian CEOs are still upbeat about their prospects. We surveyed them earlier this year and, while there has been a slowing in the economy since then, there is still a measured confidence among Australian business leaders looking ahead over the next three years,” said Mr Wingrove.

“But to capitalise on that underlying confidence it’s essential that the government uses its fresh mandate to reinvigorate policies which will stimulate the economy. We can’t rely just on monetary policy.”

Doubt lingers

Despite the broader uptick in confidence, CEOs are not as confident as prior years when it comes to their own industry’s prospects.

Just 22 per cent of CEOs were ‘very confident about the next three years, which is a fall from 32 per cent last year. This is a lower percentage than their overseas counterparts.

Australian CEOs are also less positive than previous years when it comes to global economics, with just 38 per cent saying they were either ‘confident’ or ‘very confident’ about the prospects of the global economy. This is a sizeable shift down from the 77 per cent vote of confidence in the global economy cited by Australian CEOs last year.

Will this impact hiring?

On headcount, 86 per cent of Australian CEOs believed their people numbers would increase over the next three years, with 28 per cent believing this increase would be by 6-10 per cent.

Similar to last year's report, Australian CEOs state that their companies look to get ahead by proactively recruiting the talents they need instead of waiting for growth figures. This is unlike most overseas CEOs, who have reported that they will wait and see before hiring staff.

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