What Does Low Business Confidence Mean

Low business confidence really means that businesses are operating from a fear principle instead of optimism. Firms worry about what might happen if there is a global economic meltdown. They lay off staff and shelve any plans they had for expansion. The trouble is that when enough companies do this it impacts on the global economy even more and becomes a self-fulfilling prophecy of gloom.

It’s all very well to point out that a national survey recorded confidence has fallen from the previous weak 21 index points to a record of -29, the weakest since 1997 when records were first taken. But take note that this was a survey of only 400 firms. Certainly the global economy has taken a beating – mainly due to people’s greed to start with. But businesses have lost confidence in the future mainly because they don’t know what effects the current global shock will have.

Maybe companies should start to think along the lines of the economy starting to improve, rather than getting worse. That’s what the National Australia Bank (NAB) has predicted – a slight increase over the next few years, while the Reserve Bank is even more optimistic, predicting a even stronger growth. With world powers all working hard to keep the economy from going up in flames it must certainly begin to improve before long.”