Channel chiefs and economists have warned that while GFC2 might not be upon us, business confidence is about to get a buffeting.
Their warning comes with several worldwide economies including the US, Greece, Ireland, Portugal – and potentially Spain and Italy – facing significant problems as debt levels continue to erode confidence in Government bonds.
Standard and Poor’s (S&P) went as far as to put the US’ bond rating of AAA on watch last week following a ‘small’ risk of the nation defaulting.
The follow-on effect to the local market is both good and bad. The keyword – whichever way you look at it – is caution.
Annitel chairman and managing director, Peter Kazacos, said Australian staff of multinationals could be the victims as global operations tightened and pulled back to home territory to sit out the tougher economic conditions.
In addition, consolidation in the global market could result in an organisation operating in Australia being acquired. This also often led to local staff cuts.
But it could be a positive for the local marketplace where skills demand is far exceeding current supply, Kazacos claimed.
Australian organisations would also benefit from competing with fewer multinational corporations.
“With investment being constrained, some organisations, especially smaller ones, will not be entering into our geography and competing in the short term,” he said.
However, Data#3 managing director, John Grant, said, as we exist in a global economy, local organisations should still prepare for a new wave of challenging conditions.
He had an analogy for the current economic climate: “It’s like driving in a car very fast and then having a car crash where the airbags were deployed. We got out with a few bruises and scratches, but were otherwise okay. So we got into another car and continued to drive at the same pace, only this time we’re headed towards a wall without airbags to deploy.”