More than 1 in 10 Australian chief financial officers believe their company is worse off now than three months ago, according to a Deloitte survey that found CFOs the most pessimistic since the survey series started in 2009.
Deloitte reported that Australian CFO confidence fell 35% this quarter, amid high confidence levels in the UK and North America. Sentiment is typically similar in the three regions.
Eighty-five percent of CFOs highlighted a Chinese economic slowdown as a concern, up from 34% who highlighted China as a concern last quarter.
Deloitte chief operating officer Keith Skinner noted that China wasn’t wholly to blame:
On one side we have a number of really positive indicators working in businesses’ favour here in Australia. They include interest rates at record lows and a depreciating Australian dollar, which will have had a positive impact on cash flows of many Australian companies in the last quarter.
The lower dollar has improved company financial prospects for 52% of respondents, while 82% of CFOs agreed that it has improved Australia’s global competitiveness.
Although the recent growth rate of 7.5% in China is below previous decades, it remains solid and is likely to remain so for some time.
We are not sure if China can really be blamed for the gloomy outlook amongst Australian CFOs. What this does confirm is that confidence levels remain fragile so even a slight easing of growth in China is enough to rattle local CFOs, especially while they wait for more policy certainty at home.
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