2020 CEO Survey: Business leaders have increased confidence in growth, but say challenges remain

Australia is well on the path to put the pandemic-induced recession behind it.

NAB chief executive Ross McEwan: ‘With business conditions and consumer confidence rebounding, there’s growth opportunities for business, as well as new jobs and new opportunities on the horizon.’ Picture: Glenn Ferguson

Australia is well on track to put the pandemic-induced recession behind it as unprecedented stimulus from government and the Reserve Bank has the economy on a faster-than-expected growth path, the nation’s top chief executives say.

Even as COVID case numbers remain low and community transmission has been eliminated for now, leaders have urged that stimulus programs not be withdrawn too quickly in the face of a global slowdown and that the economy be allowed to open up in line with health advice.

More than 80 chief executives across all sectors surveyed exclusively by The Australian said the economy was well-placed for a recovery in the new year, with confidence starting to return among consumers and business.

However, they also noted that while larger corporates with bigger balance sheets had navigated through the pandemic, small to mid-sized businesses bore the brunt of the downturn.

“A couple of months ago, I did not expect that we could get back to pre-COVID (growth) levels by late 2021,” National Australia Bank chief executive Ross McEwan said. “That’s my expectation now. With business conditions and consumer confidence rebounding, there’s growth opportunities for business, as well as new jobs and new opportunities on the horizon.”

However, he noted that while Australia was in a better place, next year would still be “challenging” and some businesses and people would struggle for some time yet.

The comments come as Treasurer John Frydenberg is scheduled to release the federal government’s mid-year budget and economic updates on Thursday, which is expected to show faster-than-expected recovery from the downturn and a rebound in the jobs market.

In October Treasury forecast Australia’s growth at -1.5 per cent in 2020-21 before rebounding to 4.75 per cent in 2021-22.

Latest ABS figures show the economy rebounded by 3.3 per cent in the September quarter, officially ending the recession, although year-to-date growth remains at -3.8 per cent.

“MYEFO will see an upgrade of the economic forecasts with upside surprises in activity, commodity prices and the labour market (reducing the cost of the JobSeeker program),” Westpac chief economist Bill Evans said.

Coca-Cola Amatil chief executive Alison Watkins. Picture: John Feder

A key boost to the budget is higher iron ore prices, with spot market seeing the commodity change hands at $US150 a tonne, compared to budget forecasts of just $US55 a tonne.

Coca-Cola Amatil chief Alison Watkins said she remained optimistic about the prospects for a robust recovery.

“Like many, I am concerned about the impact of the fiscal cliff in March next year, when government support will be wound back. Creating jobs and restoring consumer and business confidence will be critical to the recovery.

“Confidence, like our control of the virus, has been hard won but remains fragile.”

Macquarie Group chief executive Shemara Wikramanayake said the Australian economy had shown its “resilience”.

“Despite experiencing such a sudden shock to economic activity and physical restrictions on our ability to respond, in recent months the Australian economy has demonstrated its underlying resilience, ending the year in a much better place than many of our advanced economy peers,” Ms Wikramanayake said.

“While it will take some time to fully recover, especially in relation to employment levels, ongoing vigilance, along with the prospect of several highly effective vaccines early next year, points to a continuation of positive momentum in 2021.”

Telstra boss Andy Penn said overall the economy was growing better than most would have expected at this point, helped by government and community response.

“We need to be aware of the potential impacts of low interest rates and large budget deficits, but not necessarily be worried about them if they are achieving the right outcomes in the short term, given the challenges we are facing.”

Citi Australia chief executive Marc Luet said the economy was recovering well from the downturn. “The key has been the early and active management of the health implications, followed by aggressive fiscal and monetary policies to ensure the health crisis didn’t become a liquidity crisis,” Mr Luet said.

“The economic and health response from Australia’s federal and state governments has been world-leading.”

Medibank chief executive Craig Drummond said while there is still a lot of uncertainty in the outlook “there’s also a case for optimism”. “Globally fiscal stimulus will underwrite commodity demand and prices, Australia’s largest private sector employers remain in strong financial shape and as the vaccine takes effect through 2021 tourism and education services are well placed to rebound strongly,” he said.

Insurance Australia Group’s chief executive Nick Hawkins said he was optimistic about the recovery, with key indicators are pointing to a faster recovery than many had anticipated.