According to JP Morgan’s second annual Australia Business Leaders Outlook survey, while 71 per cent of Australian mid-sized business leaders are grappling with rising costs and challenges driven by inflation, nearly six in 10 (59 per cent) feel confident about the global and national economy and expect their revenue (77 per cent) and profits (74 per cent) to increase in 2023.
“Australian business leaders continue to demonstrate their resilience as they skillfully manage various geopolitical and economic obstacles,” said Annabelle Mooney, head of commercial banking, Australia and New Zealand, JP Morgan.
“While they see potential for growth in the year ahead, they’ve had to be nimble, adopting and deploying new strategies in response to changing market conditions.”
In a survey of 200 senior executives of Australian mid-sized companies, only 46 per cent of local business leaders expect a recession in 2023. This optimism is more pronounced than global counterparts in the US (65 per cent), UK (69 per cent), India (61 per cent), Germany (59 per cent) and France (53 per cent).
Robert Bedwell, chief executive of JP Morgan Australia and New Zealand, said: “As we continue to withstand a complex and evolving economic environment, Australian mid-sized business leaders are proving once again that they have the agility to keep pushing forward and combat the challenges that arise.”
Over two-thirds of respondents facing inflation challenges reported that the increased cost of energy, as well as rising interest rates and cost of capital (61 per cent), are driving higher business costs.
Raising prices (43 per cent), automating more processes (43 per cent) and changing their pricing models (42 per cent) are the top ways decision-makers are tackling inflation. To further mitigate costs, nearly half (45 per cent) of Australian mid-sized companies are passing up to a quarter of their increased costs onto consumers, with 83 per cent saying they are likely to continue increasing prices.
Less than half of the respondents (40 per cent) note that supply chain pressures have gotten worse over the past 12 months, and one-third (33 per cent) say they have gotten better. To counteract supply chain challenges, business leaders are allocating more funds to cover increased costs related to moving products (41 per cent) and shifting manufacturing and distribution closer to key markets (41 per cent).
More than half (52 per cent) of Australian mid-sized business leaders expect to add headcount in the next year. As they contend with a high demand for labour, those preparing to hire more are offering flexible work hours (54 per cent), giving employees flexibility on where they work (51 per cent), offering upskilling and training opportunities (51 per cent) and increasing wages and benefits (49 per cent).
The year ahead will also see Australian mid-sized business leaders focus on the importance of corporate responsibility factors, citing social (57 per cent) and environmental (51 per cent) factors, and diversity, equity and inclusion (57 per cent) as most important to their business strategies — up 14 per cent, 14 per cent and 16 per cent, respectively, from 2022.
Top outcomes of these corporate responsibility efforts are rooted in improving employee retention (52 per cent) and building company culture (50 per cent), up 4 per cent and 11 per cent, respectively, from last year.
