By Brianna McShane, Account Director
The inaugural Forbes Australia Business Summit was recently held in Sydney, featuring some of Australia’s top founders and visionaries who came to share their views on business, leadership, and technology. I went along to work the room and gather valuable insights for our 2023 business outlook.
Here’s what I discovered:
Yep, it’s going to be a bumpy ride.
It’s been hard to escape talk of inflation and softer economic growth, which has been dominating news headlines for much of this year. So, what’s the forecast for 2023?
KPMG Partner and Senior Economist Dr Sarah Hunter says we can expect more of the same. She’s predicting a 25bp interest rate hike in December with another two to three hikes in 2023.
Dr Hunter says the economy is “running very hot” and we’ll have to wait 12-18 months to see the full effects of the interest rate rises.
What does this mean for business?
JBWere Chief Investment Officer Sally Auld said with supply pressures starting to ease, the focus now shifts to the local labour market.
“It’s less about supply and more about demand, looking at what’s going on in the labour market,” Auld said.
“The key question in 2023 will be: how much damage will we inflict on the labour markets to get back to inflation targets?”
Those reading between the lines might understand Auld’s comments to mean job cuts, rising unemployment and yes, a possible recession (a 50/50 chance according to Dr. Hunter).
“We might not have big enough numbers to meet the technical term recession, but employment rates could make it look and feel like one,” Dr. Hunter said.
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There will be talent opportunities for businesses
With the outlook sounding a bit doom and gloom, we were looking extra hard for some good news (we can’t help it – optimism is one of our values!). Thankfully, there was plenty to be found.
Net migration will be a positive business story in the new year, which will help protect Australia against the recession risk.
The reopening of borders, return of migrants and an influx of international students will create a more competitive job market, making it easier for businesses to find affordable talent.
Ms Auld said the skills in high demand include healthcare, education, accounting, technology and agriculture (so, basically everything).
China’s engagement with the rest of the world after three years of COVID lockdowns is also a positive for businesses and export markets, which Dr Hunter said is some very welcome news for agribusiness and high-tech manufacturing.
While next year is set to be a period of transition, Ms Auld recommended businesses stay defensive in the first half of 2023 before embracing the new cycle of expansion in the second half.
“Be flexible and adaptable. The environment is going to be uncertain and rocky for a while, being mindful and able to respond will be critical.”
So, there you have it, some tough months ahead for businesses but it’s not all bad news. Businesses that stay lean and agile, use digital to their advantage and take care of their people and customers will come out on top and amplify their impact in 2023.
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