Recession fears surface
March 31, 2008 - 11:30AM - theage.com.au
More than half the country's small business owners feel a recession is on the way as rising interest rates and global market instability takes it toll on confidence, a new survey shows.
The March 2008 MYOB Australian Small Business Survey found 57 per cent of small business owners believe an economic recession will occur within the next three years, while 58 per cent expect the economy to fare worse during the next 12 months.
"Naturally, the current volatility in world financial markets, and the upward trend in Australian interest rates, are having a big impact on small businesses," MYOB Australia managing director Tim Reed said.
Nearly 60 per cent of those surveyed indicated a negative outlook for interest rates during the next 12 months, a significant increase from previous quarters.
While the shift in confidence was significant, recession worries had not dampened small business confidence about their own business performance, Mr Reed said.
The survey of 1,436 respondents found 54 per cent of small business owners expect their business performance to be better in 12 months' time."
"While this is slightly down since the last quarter it shows that Australian small businesses continue to drive our economy forward regardless of whether we are in boom times or periods of market volatility," Mr Reed said.
Still, the report found small business was not overjoyed by the change in federal government with 44 per cent expressing dissatisfaction with Labor's contribution to small business.
This is up from 37 per cent in November 2007, prior to the federal election.
Few small business owners are making any plans to survive an economic downturn despite worrying about the prospect of a recession.
Eighty-three per cent of respondents consider planning and preparing a business to ensure survival through an economic recession to be important, but only 44 per cent actually have a business plan.
Forty per cent also reported a somewhat negative impact on their work-life balance from running a business, while 48 per cent said they felt isolated as a small business owner.
"Stresses related to interest rate rises and threats of a recession could be having a negative impact on work-life balance for small business owners," Mr Reed said.
"It is a concern that small business owners are feeling isolated.
"It is activities such as networking groups and associations that not only establish potential working contacts for small businesses, but can also provide a link into a support network of like-minded peers."
My point of view, everyone is fear of recession and economic down-turn. In fact, is true with facts that is starting to impact. My suggestion, spent wisely but do not stop spending because it will speed up the impact.