2022, the year where something resembling normality was supposed to return has in fact, raised more questions than delivered answers. This time last year, I closed with my 2021 address wondering what our march toward a new normal looked like and the picture doesn’t seem any clearer.
Depending on your sources, Australia’s growth rate is expected to slow down to 1.5 per cent to 1.9 per cent in 2023, the real GDP somewhere in the vicinity of 1.6 per cent in 2024. CPI was expected to peak around 8 per cent in December 2022 with the RBA targeting a return to its target inflation bad of 2-3 per cent by December 2024. To do so, analysts are pricing in further rate rises to the official cash rate, some pencilling in 3.6 per cent and others predicting 4.35 per cent by the middle of 2023. Historically low unemployment is expected to rise above 4 per cent with the wage price index hovering around 3.1 per cent for 2023. Of most concern however, is the rising cost of electricity and gas, some analysts forecasting a further 20 to 30 per cent rise in 2023.
With the spectre of recession hanging over developed Western economies and no diplomatic solution to the War in Ukraine, securing supply chains is as critical as ever. You may have noticed ongoing shortages on supermarket shelves or difficulty filling orders in a timely fashion. That’s because we’re still locked in a post-COVID supply chain dance, hot stepping our way across goods and services dance floors attempting to source materials, products, and labour as best we can. If anything, 2022 heightened the priority of supply chains, not least of which concerns going local. While geographically fortunate to be in close proximity to fast growing Asian markets (44 per cent of global GDP by 2026), COVID-19 response mechanisms differ regionally, meaning one country’s post-COVID world may not be moving at the same speed as another’s, manufacturing has not yet ramped up to meet demand.
Given their far-reaching effects, it would be remiss not to discuss rising inflation and interest rates. In short, inflation is the rise in the prices of goods and services over time. High inflation erodes purchasing power, the same goods and services are now more expensive to buy and thus, consumption is reduced. For those unaware, we calculate this using the Consumer Price Index (CPI) or what’s typically found in a consumer’s basket of goods and services over time. Normally, the RBA targets CPI increases of around 2 to 3 per cent annually but as a natural consequence of COVID-19 fiscal stimulus packages, inflation has significantly outpaced the RBA’s target range, currently in the vicinity of 8 per cent.
Switching gears and building on 2021, while not without its challenges, 2022 has been a successful one for Nexia Australia. Not only have we consolidated our brand as a leading mid-tier service provider but in fact, strengthened ties between our offices, cementing an exciting strategic direction, one which we have already began rolling out. As Chairman, it’s difficult to contain my enthusiasm, observing not only how our organisation is evolving but also, how we develop staff, creating the conditions to seed their success. Perhaps most rewarding, is monitoring how all the hard work performed by Nexia staff results in positive outcomes for clients whilst never forgetting, without them, we wouldn’t exist.
