Professional services giant PwC has warned that Australia faces the risk of a recession in the next three years as economic headwinds increase.
In its 19th Annual Global CEO Survey, released earlier this month, PwC noted that the Australian economy continues to undergo significant adjustment following the end of the mining boom.
“Domestic spending is lacklustre and private investment has contracted for three consecutive quarters. Real per person incomes have been flat for five years, meaning living standards are not improving,” the report noted. “And with current economic headwinds, there’s a risk Australia could experience a recession in the next three years.”
All of this factors into the uncertainty CEOs are feeling, according to the report, which found that 78 per cent of Australian CEOs see more threats today than they did three years ago. Only a third of CEOs feel confident about revenue growth in the next 12 months, according to the report.
PwC Australia CEO Luke Sayers said that given the tough start to the year, it will come as little surprise to hear that Australia’s CEOs are less confident about growth – both globally and domestically – than they were a year ago.
“The slowing of China’s economy, sluggish global growth and our own economic readjustment away from mining and commodities, are all weighing heavily on the minds of CEOs,” Mr Sayers said.
“Understandably, they see more threats on the horizon: cyber security is number one, followed by the speed of technological change,” he said.
“As a result, CEOs have increased their focus on getting costs under control: 41 per cent plan to reduce headcount in the next 12 months, up from 12 per cent this time last year.”