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Expert says the Australian Economic Growth may not hit zero until around 2018

05/07/2013 by Bruce Gleeson

Jones Partners hosted its inaugural “State of the Economy & Industries at Risk” this week. The presentation was given by CEO and Chairman of IBISWorld, Phil Ruthven. One of the major points Phil raised when discussing levels of corporate insolvency / liquidation was that almost two-thirds (or 67%) of corporate failures were attributed to internal risk factors. This certainly appears to correlate with our own research and that of Australian Securities and Investments Commission (ASIC) which indicates that just over 60% relates to poor strategic management. Family businesses and SME’s in particular have the challenge of ensuring that they have the right level of key individuals to give the business the best possible chance of success.

Unsurprisingly, construction and retailing accounted for almost 33% of corporate insolvencies in 2012 (see diagram below – Industry Mix of Business Insolvencies). This in my view reflects the both the need for a focus of efficiencies and using technology in delivery of the product in these sectors.

Also for those of you that have been reading the headlines of late about the possible risks of a recession (in the press a risk of approximately 1:5 for 2014),diagram 2 – Australia’s Economic Growth  suggests otherwise. It can be seen from the research conducted going back to 1960 that the average business cycle in Australia is approximately 8.5 years and on that basis Phil is indicating that our economic growth may not hit zero until around 2018. It will be interesting to see what happens.

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