More than half (52%) of CEOs surveyed by the Australian Industry Group believe business conditions will deteriorate in 2013, while only 16% expect things to improve.
A third of the 350 business leaders across manufacturing, construction, and mining interviewed by the industry body expected no change.
“With the mining investment boom slowing and other sectors struggling, there are no obvious candidates to pick up the slack,” said AIG chief executive Innes Willox.
“Australia looks set for a lull in growth in 2013. The concerns of our CEOs for the Australian economy in 2013 can be grouped around three key themes: slowing demand across the economy, the high value of the Australian dollar and the challenge of global competition, and rising business costs.”
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The survey, which was completed before the announcement of the federal election, found CEOs in mining and mining services were the most pessimistic. Only 9% of them expected business conditions to improve.
The most upbeat CEOs surveyed were those who ran services businesses. However, even 42% of those CEOs expected deteriorating conditions.
Willox said the survey highlights the importance of productivity growth and a more resilient economy.
“We have the opportunity this year to build capabilities; to get on the right track with reforms to education and training; to lift business innovation; to make sensible changes to workplace relations arrangements and to commit to a phased improvement in Australia’s tax arrangements,” he said.
“This election year is an ideal opportunity for political leaders to take the initiative and commit to agendas that build the longer-term drivers of a growing and prosperous economy,” Mr Willox said.
The pessimism revealed by the survey contrasts with consumer sentiment. The Westpac/Melbourne Institute’s survey of consumer sentiment rose 7.7% to 108.3 two days ago, its highest level for two years. This has been attributed to the lowering of interest rates and the rise of the share market, which hit its highest level since 2010 this week.
The full AIG report can be viewed here.