Australia’s exporters are more optimistic about the year ahead than they were six months ago. That’s one of the key findings of Efic’s latest Exporter Sentiment Index – a survey of more than 1,200 SME exporters.
Nearly half (46%), believe the economy will be better in the next 12 months than it was in the previous – an increase of 6% since February 2017. Encouragingly, those who expect future economic conditions to be worse has dropped from 20% to just 15%.
Increased confidence regarding exporting conditions is also translating into better expectations about financial performance. Nearly two thirds of SMEs (63%) expect their financial performance to be better in the next 12 months – an increase of 6%.
Economic and business confidence is having a positive impact on employee growth and retention. Around half (49%) of SMEs expect to increase their staff numbers in the next 12 months – this is up from 43% six months ago.
Exchange rates and economic uncertainty, however, remain serious challenges for small business exporters, with 45% identifying exchange rates, and 43% identifying economic uncertainty as significant challenges in the next 12 months. This is a slight improvement of 3% less than previous findings.
In another signal of the strength of the export market, an increasing number of SMEs have positive expectations around direct investment into overseas markets. Just over half (53%) of small businesses expect overseas investments to increase in the next 12 months. This is an increase of 7% since February.
SMEs also expect the investment they are putting into overseas operations to lead to strong sales revenue growth, with 62% cent anticipating revenue growth in the 12 months ahead – an increase of 7%. And encouragingly for other businesses who are considering whether to launch export operations, SMEs put this revenue growth potential down to increased demand in overseas markets in the next 12 months.
Finally, the increase in positive sentiment is not surprisingly reflected in bullish profitability expectations. 58% of Australian small business exporters expect to increase profitability over the next 12 months – an increase of 7% since February.
[Efic’s Exporter Sentiment Index is a bi-annual study, tracking key sentiment indicators among Australian SME exporters. This study provides insights into expectations around financial markets, current and future business conditions, overseas sales growth forecasts, and expectations around access to credit.]
About the author
Andrew Watson is Executive Director, Export Finance with Efic, a specialist financier that helps small businesses win business, grow internationally and achieve export success.