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Business confidence for conditions within their own firms remains strong



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MEDIA RELEASE May be reported on: Monday, 10 August 1998 j , L J L .

Business Confidence for Conditions within their Own Firms Remains Strong

Statement by Mark Paterson, Chief Executive on the Release o f the July 1998 ACCI Survey o f Investor Confidence

In spite of all of the problems amongst our trading partners in Asia, the Australian economy continues to move forward.

The results of ACCI’s Survey o f Investor Confidence, which was conducted during the latter half of July, show the private sector continuing to expand. Where the problems with Asia are clearly evident are in responses to questions on the state of the national economy. Business does expect the economy to slow as a result of the Asian crisis.

But when respondents are asked about conditions within their own firms, their replies show there has been virtually no change in business sentiment since the start of the year.

It is important to understand the nature of this survey to appreciate the significance of these results. The survey asks firstly about the state of the national economy. In answer to these questions, the survey shows a fall in confidence with the expectation that the economy will slow to

some degree.

But the survey then asks about conditions within their own firms. The answers to these questions show little if any evidence of a fall off in confidence, sales or profitability.

There is no question that the Asian crisis, as well as the fall in the value of the dollar, have had an effect on business confidence. Economic growth will be lower than it otherwise would have been.

At the same time, however, it is important not to overstate the effect on the domestic economy of the problems which are occurring throughout the region. It appears on the evidence thus far that the Australian economy can continue to withstand the impact of Asia and should continue to expand in spite of the turmoil to our north.

For further comment, please contact: Mr Mark Paterson 02 6273 2311 (B/H) Chief Executive 016 280 664 (pager)

Dr Steven Kates 02 6273 2311 (B/H) Chief Economist 02 6295 0827 (A/H)

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