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yARN: It's raining - so what!

Mike Gee | April 17, 2014
Looking around over the past few weeks the clouds seems to be gathering over the ICT industry – and, for once, there's no pun intended.

Looking around over the past few weeks the clouds seems to be gathering over the ICT industry — and, for once, there's no pun intended.

However, that wasn't going to be the opening to this edition's natter, until Treasury secretary, Martin Parkinson, in a speech to the Sydney Institute, declared that Australia must be prepared for a recession in the next decade, according to an online article in The Australian.

The paper reported, "Dr Parkinson ridiculed the suggestion that the budget could be returned to surplus in five years — as suggested by Labor Treasury spokesman Chris Bowen — saying this would require a miraculous surge of GDP growth to 5.25 per cent at a time of declining mining investment. 'Arithmetic suggests the dice are loaded against us and the economy is unlikely to 'whirr back into surplus', to borrow a phrase from another era," he said, using a line from former prime minister Paul Keating."

Looking ahead, Dr Parkinson claimed, based on medium-term projections for the budget, it would still be in a small deficit of 0.5 per cent of GDP by 2023-24. But even this was too optimistic.

Add to that solid evidence that Chinese economy is slowing — its vast manufacturing industry contracted for a third straight month — and the US still isn't showing a lot of progress, and the global prognosis isn't very healthy either.

The Wall Street Journal reported the global economy risks years of sluggish growth without aggressive steps by central bankers and lawmakers around the world to boost output, according to International Monetary Fund (IMF) managing director, Christine Lagarde.

"The recovery is taking hold, but is too slow," Lagarde said in a prepared remarks to Johns Hopkins University's School of Advanced International Studies. A few days later, The Australian reported the IMF had sharply downgraded its estimate for Australia's economic growth next year from 3 per cent to 2.7 per cent and cut its estimate for 2013 from 2.8 per cent to 2.6 per cent, warning that the economy will be slow for the next years as the world economy struggles to achieve a sustained recovery.

So what does that all mean? I suspect, in Australia, it means little help for ICT from the government or a bounce back fuelled by a growing economy. Some of you would probably say 'what's new!'. In short, it could well spell the continuation of the fairly ordinary and underwhelming conditions that many businesses have experienced in the first quarter of 2014.

At the recent Judges' Lunch, which traditionally launches the year's ARN ICT Industry Awards, much of the talk was about how tough and slow the past the quarter had been. And while some companies were seeing indicators for a better April- June block, it seemed they also had their fingers crossed as well.


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