AUD drop to reveal poor performers
The drop in the Australian dollar may reveal a few poorly performing sectors, according to accounting and advisory firm William Buck.
Chairman of William Buck, Nick Hatzistergos, said sectors like manufacturing and retail may have used the currency as a "smokescreen", with high exchange rates being used as an excuse for sluggish business strategy.
"We have seen a fall in the Australian dollar of more than 14 per cent in two months, but I'm not hearing of a rapid turnaround in manufacturing or retail yet," Hatzistergos said.
"There appears to be major structural problems in manufacturing in Australia and most of the profitable manufacturers are now outsourcing at least some of their production to Asia to compete," he added.
"It is the same with retailing; if you blame poor sales on competition from online retailers or the high Australian dollar or the goods and services tax loophole, then you are not facing up to reality."
The Reserve Bank of Australia recently predicted a 10 per cent fall in the Australian dollar would add 0.25 per cent to the economic growth rate over the next two years. However, Hatzistergos said this was a conservative outlook for most businesses he had spoken with.
"While many of the SMEs we work with will be budgeting conservatively for a 3-5 per cent growth in turnover for 2013/14, most have stretch targets of at least a 10 per cent improvement, with profitability being more important than growth," he said.
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