The Recovery – when is it coming for Australia and what should I do? - Peter Wilkinson

There seems to be quite a deal of confusion regarding where we are in the economic cycle in Australia. The key questions people are asking themselves are “If and when the general economic recovery comes will I notice it?” and “What should I be doing right now to prepare?”

There seems to be quite a deal of confusion regarding where we are in the economic cycle in Australia. It was very illuminating to attend the recent AusRail Conference at the Sydney Convention Centre and “take the temperature” of the attendees. The key questions people were asking themselves are:

“If and when the general economic recovery comes will I notice it?” and
“What should I be doing right now to prepare?”

There was certainly two distinct groups in the room: those for whom business remained tough and who are struggling to see the light at the end of the tunnel (for railway people this is actually evidence of an oncoming train….) and those who have so much work on that they are hanging out for a break at the end of the year.

How could this be? In fact this type of sentiment is typical of the period at the end of a downturn. This current period of hesitant, uneven recovery is characterised by good and bad news in almost equal measure. This tends to create confusion and uncertainty in the minds of business owners and executive management and makes achieving consensus around investment decisions very difficult. The overriding issue is that this is the first time that most business owners have had to navigate a protracted “W” type recession. Since the GFC in 2008 we have has 5 years of sideways movement in the market. We all know that the recovery will come – it’s just that we’ve been waiting for a very long time………

Consider the following thoughts as a way of gaining some perspective on the current situation. The US Dow Jones Industrial Average has regained its pre-GFC levels. There are signs of strong recovery in the UK after 5 years of deep recession that we in Australia have been very fortunate to have largely avoided. History also shows that Australia follows the rest of the world when it comes to our economic cycles. There are certainly structural issues in our local economy, for instance concerns regarding our productive capability that I will explore further in subsequent articles, however for the foreseeable future there are logical reasons to have a positive outlook.

So what should you do? Right now is a great time to be investing in business. More specifically, those who are assessing and strengthening their management systems and building capability in their businesses are those who will be best prepared for the next phase of growth……

Have a very merry Christmas and lets all look forward to a very productive 2014.