After a brief hiatus in January, the Reserve Bank of Australia (RBA) has once again hiked the cash rate by 0.25% for its first meeting in 2023, marking the ninth consecutive rise.
What’s more, with Australia’s inflation rate currently sitting at 7.8 per cent, Governor Phillipe Lowe has warned over even further rate hikes this year.
Understandably, businesses and consumers alike are feeling the pinch as funding rates right across the spectrum move higher. This combined with inflationary forces which are driving up input costs and operating expenses is creating a perfect storm, and Australian businesses need to be prepared to weather it.
Is a recession coming?
While many comparisons are being made to the brutal 1990-91 economic recession which was also preceded by rising inflation and interest rates, it isn’t entirely clear at this stage whether Australia will certainly enter one.
Will we see a wave of bankruptcies? Will the unemployment rate skyrocket like it did in 1990? Nobody knows for certain, but either way, it’s clear that the headwinds are strengthening.
Businesses owners therefore need to be actively taking steps now to safeguard their operations.
Whether it’s boosting cash levels, reassessing business expenditure, or exploring what debt restructuring options might be available, there are various options available and worthy of consideration.
How Falanga & Co can help
If you have concerns about your own situation and want to see if you are able to strengthen the position of your business, then please reach out to us as at your convenience, we’re here to help.
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