Australian business owners are “largely optimistic” about 2012, according to a Grant Thornton report, but expect to see a decrease in exports amid global economic uncertainty.
Grant Thornton’s International Business Report is based on a survey of 2,800 listed and privately-held businesses across the globe, including Australia.
The target respondents are chief executive officers, managing directors, chairmen or other senior executives from 40 economies, primarily across manufacturing, services, retail and construction.
The report shows Australian business optimism in the fourth quarter of 2011 stood at a positive balance 24%, while global optimism and pessimism were finely balanced at 0%.
Bill Shew, a partner at Grant Thornton Australia, says local entrepreneurs are “hard-wired to be optimists”, which means they are looking for growth despite global economic conditions.
That’s not to say Australian business owners aren’t concerned about the future. According to the report, skills shortages continue to be the most common constraint on business expansion.
“Employers are still looking to entice good people to join their businesses and retain high-performing employees with salary increases,” Shew says.
“Eighty-two percent of business owners expect to increase salaries in the coming year, while 25% expect this increase to be greater than inflation.”
Meanwhile, global trade is suffering. After rising by 10% in Q3, the proportion of businesses citing a shortage of orders in Q4 remained steady in Australia, but rose by 5% to 37% globally.
This result was largely driven by an increase of 9% across the eurozone, although businesses in North America and the BRIC countries (Brazil, Russia, India and China) are also suffering.
According to the report, Australian businesses are expecting to see a decrease in exports over the coming year, down 7% on the prior quarter to just 9%.
In light of the findings, Shew says policymakers in Europe have “some job on their hands” in 2012.
“The concern for businesses is that a focus on austerity, rather than economic growth, is damaging their own growth prospects, as well as those of their trading partners in Australia and around the world,” he says.
“Certainly, the resolution of the crisis, and securing the future of the euro, is top of their New Year’s wish list.”
The news comes after Australia was ranked third for economic freedom, out of 184 countries, by US think tank The Heritage Foundation, beaten only by Hong Kong and Singapore.
Country rankings are based on 10 measures covering rule of law, how open their markets are, regulatory efficiency and size of government.
The average economic freedom score for the 2012 index stands at 59.5 – on a scale in which 100 represents the ideal – down two tenths of a point from 2011.
New Zealand was ranked fourth this year, followed by Switzerland. Rounding out the top 10 were Canada, Chile, Mauritius, Ireland and the United States. North Korea was ranked last.
The report accompanying the index said government spending, in response to the global economic crisis, was the biggest factor in dragging down the global score.
“The mounting burden of reckless government spending, in many cases, has overwhelmed gains in economic freedom achieved in other policy areas,” the report said.
“Tension between government control and the free market has heightened around the world, particularly in developed countries.”