Directors down on Aussie economy

Directors are more pessimistic about the future health of the Australian economy than ever before.

Figures from the 2014 second half Director Sentiment Index (DSI) show that more than 40 per cent of directors considered the Australian economy as weak in the past six months, while half see it as weak at present.

The future outlook is even more pessimistic, with 55 per cent of directors expecting the economy to remain weak over the next year.

Remaining consistent with the first half of 2014, the survey of 501 directors conducted by the Australian Institute of Company Directors cited low productivity growth as the biggest economic challenge facing Australian business. This was followed by global economic uncertainty and low consumer confidence.

Overall, director sentiment regarding economic indicators was down from the first half of 2014, with 86 per cent of directors expecting to see the value of the Australian dollar decline further over the next 12 months.

Almost 60 per cent expect to see a rise in unemployment across the country, while 34 per cent expect the rate of inflation to increase. Thirty eight per cent expect a hike in the Reserve Bank of Australia’s official cash rate. 

For the first time since the survey began, directors expect the US economy to be stronger than Asia over the next 12 months, with almost 40 per cent expecting an uptick in the next year. 

However, director sentiment regarding the European economy has remained pessimistic, with 70 per cent expecting it to remain weak over the next 12 months.

For a copy of the full report, please click here.