Source: Deloitte Access Economics, Business Outlook.
And as the economic cycle passes its nadir and begins to pick up again, Australia's reeling economy cannot afford to sit idly by and watch today's cost of living crisis unfold. Instead, Australia's business sector should also look to 2024 as a year that offers growth opportunities.
According to these forecasts, business investment appears to be slowing, with only 2.9% growth in 2023-24 and 1.6% growth in 2024-25. But beyond short-term economic cycles, there are significant opportunities (and some challenges) for Australian businesses through the uptake of AI and the transition to net-zero emissions by 2050. Business investment and productivity improvement remain our biggest challenges. In light of geopolitical uncertainty and geopolitical architecture restructuring.
Investing in artificial intelligence (AI) offers a significant opportunity to drive productivity gains, with the potential to benefit the Australian economy as a whole. Some industries, such as finance, ICT and media, professional services, education, and wholesale trade, could be accelerated by companies adopting AI (AI generation). However, broader business investment is likely to require governments to play a significant role.
Governments are likely to play an important role in enabling business investment. Australia's federal and state governments have the potential to make a difference in this economic transition, but that does not mean they will do nothing. The expected growth in government investment from 2023 to 2024 is 7.5%, but only if investment is properly targeted.
For example, the government can support and enable the large-scale business investment needed to decarbonize and rebuild Australia's economy. Taking advantage of the global race to achieve net-zero emissions is expected to boost Australia's economy by $435 billion in the long term (with all systems running and electricity moving forward).
The September quarter of 2023 is likely to be the toughest period for the Australian economy, but at the same time This is a turning point and an opportunity to focus attention on more important themes, such as boosting competition, fostering innovation, and building an elite national skills base.
This newsletter was distributed on October 18, 2023.
This blog is co-authored by Lester Gagnon, Manager at Deloitte Access Economics.
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