CFO Sentiment | Edition 7

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CFO Sentiment | Edition 7

Global headwinds take their toll

Optimism amongst Australia’s CFOs has fallen again, amid concerns about both global and local economic conditions.

Economic conditions, both at home and abroad, diminished optimism amongst Australian CFOs in the first half of 2019 – with China the largest source of global concern, and its continued trade stoush with the US impacting Australian businesses and increasing the potential for a hard-landing for the world’s second biggest economy.

The RBA’s recent cuts to interest rates are being viewed positively by CFOs, providing some with hope in their economic stimulus potential, and also prompting some to consider further investment in their businesses. But favourable financial conditions have not been enough to outweigh CFO concerns about Australia’s broader economic performance.

Looking ahead, the expected pace of change is weighing on CFO minds. For some, increased M&A activity will drive this change, while for many, digital transformation within finance functions could help them manage these changes more efficiently.

According to the latest edition of Deloitte’s biannual CFO Sentiment survey, and covering the first half of 2019:

  1. Net optimism amongst CFOs is down to 60%, from 73% 12 months ago
  2. Net pessimism about the Australian economy has grown since the end of 2018 – from 8% to 22%
  3. 44%  report rising trade tensions between the US and China have already negatively affected their businesses – and 68% expect negative impacts in the next one to four years
  4. 57% think now is not a good time to take on more balance sheet risk
  5. 35% suggest lower interest rates may prompt new investment in their business (although two-thirds remain uncommitted)
  6. Nearly one-third expect to see an increase in their business’s M&A activity over the next 12 months.

Deloitte CFO Program leader, Stephen Gustafson, said: “While still in positive territory, CFO sentiment has now fallen across our last two surveys.”

CFO Sentiment | Edition 7

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