2010: Trends and Opportunities

by Michael Harrison

The Chinese proverb “We live in interesting times” must surely be one of the most apt for what lies ahead for Australia for 2010. In a world wracked by the Global Financial Crisis in economic and in social terms, Australian business leaders and managers can look forward to building on the green shoots of recovery that have emerged since mid year.

"Encouraging" rather than "interesting" comes to mind if one looks at the most recent statistics and commentary posted by both government and Treasury officials on the Australian scene.

According to Treasury, Australia is one of the best-performing nations in the world. Importantly, it sits in a region where its neighbours, Indonesia, Malaysia, Singapore, India and China are to various degrees, experiencing encouraging economic conditions. China is powering on, and carrying the rest of Asia with it. China’s latest GDP growth was reported at an astounding 8.9 percent. And India is reported to be considering raising interest rates – a sign of positive economic conditions.

Australia however, was never going to be immune from the global turmoil. A small economy with significant trade and financial linkages to the rest of the world will always be impacted by the forces from the USA, Japan and Europe.

The themes for 2010

At a macro economic level, we are seeing significant cross currents. On the one hand the drag on world economies by the US, Japan and Germany will remain significant. On the other hand, China’s continuing strong demand for our commodity exports particularly iron ore and coal have remained remarkably buoyant – increasing by around 2 per cent since the September quarter 2008. This is setting the stage for large infrastructure investment in Australia targeted at removing inefficiencies in port and rail.

Migration

Migration is being driven by increasing mobility of transient workforces (for example migrant labour), economic and refugee migration out of Afghanistan and Sri Lanka. These have major implications on the social and economic fabric of Australia a trend that commenced more than 50 years ago with the post World War 2 wave of migration from Europe and which contributed to the great multicultural cites of today. They also stimulated economic activity which was starkly evidenced by the boom created by the Snowy River Scheme over the period 1956 - 1968.

One of the great themes emerging is the extraordinary population increases being experienced in Australia. Migration and the high level of re-skilling needed in Australia in order to shape its position as one of the most attractive investment countries in the world, will present as the just two of the emergent themes for 2010 and beyond.

Migration and population growth, a continuous political and social issue is certain to stimulate discussions across Australia and get many entrepreneurs into action..

Flexible staffing

Business leaders of all sizes appear to have out-smarted the markets. A feature of the current downturn has been that employers have refrained from widespread labour shedding, by reducing staff working hours – significantly cushioning the unemployment rate.

In this regard I believe that the view has been that good talent is simply too valuable to let go. Decision-makers appear to have gone for more flexible and innovative solutions – shifting to contingent labour were necessary and more part time employment.

ICT developments

ICT developments across Australia are set to cause further quantum leaps due to lowered barriers to globalisation. This has facilitated the rapid deployment of new production processes in virtually all industries. A strong shift towards the “servicisation” of our industrial landscape – including in the traded sectors of the economy will emerge.

Moreover, in a world where tens of millions of workers in emerging market economies who are willing to do the same work as those in Western economies, but at much lower prices, it is clear that wage deflation is the order of the decade. Maybe the century.

Climate change

Finally, and by no means least is the climate change theme. Markets across Australia are transcending policy. Whilst politicians dither and quiver, business and community are starting to take action. Already we have seen the various government subsided “green” initiatives produce booms in industries such home insulation and ‘green’ plumbing.

Seizing opportunity

To guarantee growth in 2010 business owners need to determine what resources they will require to seize the opportunities.