But McAlpine says the survey results suggest business leaders are not letting the prospect of a recession – which, should it come, will hopefully be relatively shallow and quick – derail their growth plans.
More than 50 per cent plan to expand into new distribution channels and markets overseas, 56 per cent plan to increase headcount and 45 per cent plan to prioritise their most profitable products.
And business leaders appear confident these initiatives will deliver, with 82 per cent expecting revenue to rise, 78 per cent tipping profit to grow and 73 per cent planning to increase capital expenditure.
Impact of RBA rate rises
“The expectation of recession has been discussed in the economic press and in the market for some time. So these businesses are ready to face challenges, but they’re also just pushing through,” McAlpine says.
While the JPMorgan house view is that the Reserve Bank will maintain a rising bias for the first part of 2024 and will be circumspect about declaring victory in its fight against inflation, the prospect that rates have or are close to stabilising appears to have had a dramatic impact on the preparedness of business leaders to take on debt. The survey found 77 per cent predict their credit needs will increase in 2024, up from just 7 per cent last year, when the prospect of a string of rate increases was very much in play.
While bank credit remains the most common source of financing (66 per cent of respondents), nearly 47 per cent of respondents said they planned to add direct lending or private credit to their funding mix in the year ahead, significantly higher than the US (8 per cent), Britain (34 per cent), France (33 per cent), Germany (37 per cent) and India (34 per cent).
Inside JPMorgan’s commercial bank, McAlpine sees a big opportunity to help clients tap different sources of funding as they seek to put growth plans into action. That will involve working closely with the firm’s investment banking franchise, led by Julian Peck, but McAlpine says the commercial banking division has also hired experienced bankers in areas such as technology, healthcare, the industrial and consumer sectors and early growth.
The survey underscores the way Australian businesses have rushed into the artificial intelligence revolution, with 86 per cent of respondents using AI tools or considering using them.
What’s striking is the promise the leaders see for AI across the board. More than 90 per cent of those using or planning to use AI said they were looking at applications in financial management, operations, pricing and costing, communications, product development and human resources.
Saying you’ll use AI and actually reaping the benefits are, of course, two different things, but there’s no doubt the appetite for adoption is there.
