22 July 2008
Media Release
GDP growth forecasts have been downgraded for many countries around the globe, with the world GDP forecast for 2008 now at 2.8%, according to the latest Dun & Bradstreet (D&B) quarterly Economic & Risk Outlook Report.
The D&B report states that global inflationary pressures and the continued impacts of the US-led credit crunch are the most significant challenges facing developed and emerging economies worldwide, with policy-makers now focussed on price pressures which are expected to be maintained over the medium term. The persistent inflationary pressures are being driven by the high price of oil and the increased cost of many foodstuffs.
Meanwhile the report states that the worst of the liquidity crisis is not yet over despite some predictions to the contrary. Conditions in the credit markets continue to be tight, with strain evident in the spread between money-market interest rates and official rates, which remains much wider than the historical average. The markets are likely to remain constrained at least until the end of 2008 as banks rebuild their balance sheets before expanding their loan books in 2009 as they seek to generate operational profits.
| The report shows a deteriorating outlook for some of the largest economies and key trading partners for Australia. In the United States the assessment of the economy continues to be downbeat, with rising inflation, higher commodity prices, job losses and falling home prices representing significant risks to growth. The sentiment in the United Kingdom is similar and while an outright recession is unlikely, a slowing economy and accelerating inflation are posing significant challenges for businesses and consumers. Meanwhile in New Zealand expectations of a further downturn have increased as a result of two consecutive quarters of slower GDP growth. In Japan a number of factors - including the rising cost of basic necessities and slow wage growth - have muted the outlook for private consumption growth, while in India significant exposure to current high international oil prices is creating liquidity concerns for state-owned oil corporations. |
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Even China has seen a drop in business confidence, with figures from the National Bureau of Statistics revealing falls in their confidence index of over 10 points quarter-on-quarter.
According to Christine Christian, D&B's CEO, GDP growth throughout the world will ease in 2008 as the continued pressures resulting from the credit crisis and the global inflation challenge lead a slowdown in demand by both businesses and consumers.
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"The challenge policy makers are facing across the globe is that increasing interest rates - the traditional mechanism for curbing inflation - will not directly impact the oil and food prices that are driving inflation," said Ms Christian. With interest rates at 12-year highs the most recent data from the Reserve Bank of Australia indicate that domestic credit growth continues to wane. Despite this D&B expects interest rates will be kept on hold in the short term to limit the impact of the 'second-round' effects and prevent a wage / price spiral from occurring. |
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Australian businesses and consumers are feeling the pinch of higher prices and funding costs. D&B's latest Business Expectations Survey reveals an anticipated rapid slowdown in activity with the sales, profits, capital investment and employment indexes all in negative territory while the Consumer Credit Expectations Survey reveals that one third of Australians expect their level of household debt to increase in the September quarter. |
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About D&B
D&B is the world's leading provider of business-to-business credit, marketing and purchasing information and receivables management services. D&B manages the world's most valuable commercial database with information on more than 130 million companies.
Information is gathered in 193 countries, in 95 languages or dialects, covering 186 monetary currencies. The database is refreshed more than one million times daily as part of D&B's commitment to provide accurate, comprehensive information for its more than 150,000 customers.
The Australasian operations were bought out by the senior management group in August 2001. It was the first MBO of a wholly owned subsidiary in D&B's history worldwide.
Today Lazard Carnegie Wylie owns an approximate 90% stake in DBA and the local management team a 10% stake.
Strategies for future growth include developing DBA's commercial and consumer credit referencing business; expanding its receivables management outsourcing business; maintaining its lead in the development of unique credit and risk scoring products; and developing new products specifically tailored to the Australasian market. DBA currently employs over 500 people in Australia and New Zealand.
