Executive Search in Australia – 2020 Outlook
Australia Staggers, But Stops Short of the Brink
Australia’s record 28 years of economic growth without recession is unmatched by any other nation according to the International Monetary Fund (IMF). However, the IMF and other authoritative local sources highlight a rapidly slowing Australian economy in 2019 and paint a bleaker picture for 2020.
The Australian Institute of Company Directors (AICD) state that the findings of their most recent Sentiment Index lead it to state the 2020 outlook is the bleakest it has been for three years. The graph below taken from the AICD index shows the main economic challenges facing Australia.
Main Economic Challenges facing top 3% of Australian Business
The IMF predicts the Australian economy will still grow in 2020 but has downgraded its forecast from 2.7 percent to 2.3 percent. However, the prolonged drought and the economic impacts of the devastating bushfires in Victoria, New South Wales and South Australia are yet to be felt in the economy so it is possible the IMF may further reduce their forecasted rate of growth.
A general fall in confidence has led to a collapse in business investment due to the factors shown above and is contributing to poor productivity. Not surprisingly, productivity in the agriculture sector has fallen by almost 10 percent as a result of the prolonged drought. However, productivity has also fallen in construction, manufacturing, the energy sector and food services.
This situation has been exacerbated by a decrease in consumer spending again because of uncertainty, lack of confidence and risk avoidance in the face of concerns about job security.
Government investment in major infrastructure undertakings and modest export growth are the primary reasons the Australian economy did not slide backwards in 2019.To address the current situation and outlook there is an expectation in business circles of:
- Further action from Australia’s Central Bank (The Reserve Bank) on monetary policy with further and prolonged cuts in interest rates expected;
- Further significant Federal and State investment in infrastructure;
- Government action on energy policy-climate change nexus;
- Slow wages growth to be addressed so that household incomes lift with a corresponding rise in consumer spending (hopefully).
However, overall, growth in 2020 is expected to remain ‘low and slow’. But hopefully Australia avoids a recession.
Accordingly, clients will be relying on services of providers like Cornerstone to look for Game Changers that can improve significantly the business outcome of the client operation. We expect larger clients will reconsider the FIXED COST of setting up an ‘in-house’ talent attraction team as part of the corporate cost cutting measures which may see a return to a greater use of external executive search service providers.
A focus on pro-active account management efforts to maintain existing client relationships together with new business development activity in targeted sectors will be mission critical activity.
Contact Allan Rae for additional discussions.
