How does the year ahead look through an economist’s eyes? As 2013 begins, we’re enjoying the lowest interest rates since the 1960s. There’s even talk of the cash rate sinking to 2% by year’s end, which is great news for business. This makes equipment finance more affordable, allowing businesses to reduce costs and increase production efficiency through investing in capital equipment.
Significantly, the equipment finance industry accounts for 40% of the national equipment capital expenditure, and when businesses invest in equipment they’re tooling up to lift production output which helps create jobs and stimulates the economy. Yet instead of seizing the opportunity, businesses are tending to pay down debt and are shying away from borrowing money, which has the effect of stunting business growth.
On a positive note is the fact that in the recent CBA Future Business Index study, 8 out of 10 businesses said they expect conditions to improve, or at least stay the same, over the next 6 months.
So whilst there are positives and negatives at home – depending on how you look at the current data – business confidence along with indications of an improving world economy suggests 2013 should be positive year for us here in Australia.