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The outlook for Australian business investment is weak despite record low interest rates, according to the latest Grant Thornton International Business Report.
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Business investment continues steady fall
17 July 2015
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6 minute read
According to the quarterly global survey of 2,580 business leaders, just 26 per cent of Australian businesses expect to invest in plant and machinery in the next 12 months – down from 34 per cent in 2013 and 42 per cent in 2012.
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Mauri Mucciacciaro, national privately held business & wealth advisory leader, Grant Thornton Australia, said this could pose a problem as continual investment in the latest physical resources is vital for the long-term corporate growth.
“This weak inclination of companies to invest may be reflective of fears around the slowdown in China, which has led to business leaders’ economic optimism dipping for the third quarter in a row,” Mr Mucciacciaro said
“Australia experienced positive GDP growth in the first quarter of 2015, which was led by exports. But the current outlook for commodities is weak, highlighting the need for economic diversification.”
However, the Grant Thornton research also revealed that the percentage of businesses looking to add staff has risen steadily over the past four years, indicating that businesses are choosing to grow through their people.
“This school of thought is reflected in the number of businesses complaining about the lack of skilled workers available in the marketplace, falling from 59 per cent pre-global financial crisis [GFC] to just 18 per cent today. These complaints could be due to the influx of skilled workers moving to Australia for work as a result of the GFC.
“The whittling view that there is a lack of skilled workers available removes a strong perceived constraint for future business growth,” Mr Mucciacciaro said.
“Investment in people and physical resources go hand-in-hand. One cannot work without the other in relation to long-term growth and the ongoing ability of businesses to deliver on their value-add promises to their clients.”
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