The findings are from the 2017 Global Business & Spending Outlook by American Express and Institutional Investor, a new global study into international business sentiment amongst financial decision makers. The report gauges the views of senior business leaders, particularly CFOs and finance executives.
One hundred and eighty executives from across Australia and Asia Pacific participated in this year’s research. Each of the respondents were responsible for the financial wellbeing of companies with more than US$500 million annual revenue.
Despite coming from a range of industries and backgrounds, most of the Australian respondents were largely bullish about the upcoming local outlook. Some 83% of local respondents expected to see substantial or modest economic growth in the coming year, compared to the global average of just 70%.
This year Australian CFOs had further reason to be optimistic: After some uncertainty last year, growth in China’s manufacturing sector and increased infrastructure spending bolstered the local mood. Improvements in the regulatory landscape in other historically important trade markets also may have contributed to the positive outlook amongst financial decision makers.
The results underscore the importance of markets like China to an increasingly Asian-focused Australian business community. Of the CFOs surveyed, 67% expect exports to countries such as China to become more important to support their company’s future growth strategy.
The Australian-China Free Trade Agreement has been in force since December 2015 and China is currently Australia’s largest trade partner in terms of exports and imports. China will continue to boost demand for Australian resources, such as iron ore and coal.
Overall respondents in Australia (as well as other exporters of natural resources such as Canada) were more likely than their overseas peers to predict ‘aggressive’ spending and investment during the coming year.
The proportion of CFOs who said their spending could be categorised as ‘aggressive’ grew from 19% in 2016 to 27% this year. Only Canadian CFOs had more bullish growth expectations.
Yet outside of the promising opportunities in Asia, Australian CFOs are more wary about potential instability.
Eighty-seven percent of local decision makers said they were concerned about unexpected economic, political, social, or environmental events in other parts of the world destabilising their business plans. This was roughly consistent with concerns in other parts of the world (globally 91% of respondents said they were worried about such ‘surprises’).
Unlike other countries, however, local executives in Australia have already started to prepare for the unexpected. More than two-thirds of local financial decision makers said their companies have started becoming more cautious about investing overseas, whilst 93% expected to withdraw company operations from high risk geographies, whilst only 13% of Australian companies expected to increase the level of overseas spending and investment by more than 10% in the next year.
Other more cautionary measures included improving financial visibility and shoring-up cash flow and access to capital.
Some 96% of Australian CFOs said that improving cash flow and working capital would have a more important role for their company this year compared to last.
The most popular route to improving cash flow for Australian businesses will be offering dynamic discounting to customers that paid on time, whilst supply chain financing and turning to more traditional lines of credit also remained popular approaches.
53% said they would opt to maintain staffing at current levels, whilst 13% would be likely to reduce their worldwide headcount in a bid to lower costs.
For more information, download the 2017 Global Business & Spending Outlook by American Express and Institutional Investor.
- Australian financial executives amongst the world’s most optimistic about business growth during the coming year.
- Rebound in key trade markets such as China and Japan key driver for Australian confidence.
- Local executives still concerned about unexpected events elsewhere in the world.
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The GBTA Business Traveler Sentiment Index™ Global Report — January 2017, in partnership with American Express, aims to understand how business travelers feel about their travel experiences and how those feelings affect their travel behaviors. The results of this edition of the research are based on an online survey conducted by the GBTA Foundation from September 6 to 26, 2016. The survey polled 3,220 full-time and part-time employees in Australia, Canada, Germany, Hong Kong, Japan, Mexico, the United Kingdom and the United States who traveled for business at least four times in the previous 12 months.
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