Australian economy falls victim to global recession: Hagop’s commentary

The Australian economy contracted by 0.1 per cent in trend terms during the December 2008 quarter while the printing industry also experienced its third consecutive quarter of declining activity.

The printing, publishing and recorded media industry contracted by 3.6 per cent during the December 2008 quarter to register an annual decline of 5.0 per cent. The outcome for the December 2008 quarter was the worst outcome since June quarter 1991.

The annual growth rate of the Australian economy has now dipped to just 0.6 per cent in trend terms after the previous quarter's growth figure was revised downward.

Printing Industries national manager for policy and government affairs, Hagop Tchamkertenian, said the Australian economy, which had so far done well to continue growing despite the global economic recession, now appeared to have succumbed to the global trend.

"We have seen that all the major economies slid into recession during the December quarter while others like China had their growth rates slashed. This synchronised global economic downturn is unprecedented. The latest victim is the Australian economy," he said.

"Given the economic slowdown, the printing industry is once again facing difficult economic conditions.”

The release of the economic growth data by the Australian Bureau of Statistics (ABS) brings to end the release of major economic data for the recently completed quarter. On Monday sales and profit data were released by the ABS which showed that sales in trend terms fell by 3.6 per cent during the December quarter in the printing, publishing and recorded media industry while pre-tax profits deteriorated by 15.9 per cent.

At the Australian economy level both sales and profits also deteriorated but growth in new capital expenditure remained positive in spite of a moderating trend. In the printing, publishing and recorded media industry, new capital expenditure was reported to have fallen by 1.7 per cent representing the fourth consecutive quarter deterioration. When compared to the same period a year earlier, new capital expenditure was down by 30.7 per cent in the printing industry.

"Whether it is sales, profits or new capital expenditure, the downward trend is very evident in our industry. While the printing industry has a history of dealing with tough economic conditions that does not necessarily mean it's going to be business as usual,” said Hagop.

"Printing businesses must focus on a range of strategies to cope with the prevailing economic environment. These include reducing unnecessary costs and lifting productivity, maintaining cashflow, continued investment in key staff and in new technology with a potential to deliver improvements to the bottom line."

Hagop said the companies that will survive the current economic downturn will be those that are truly sustainable businesses.

"This is why it is important for each printing business operator to provide an answer to the following question: Ideally, what kind of business do you want to operate when the economy pulls itself out of the current economic downturn?

"While each operator's answer will naturally dictate the subsequent course of action that has to be taken, one thing that needs to be well appreciated by all industry participants is that in the current business environment, failing to plan is planning to fail," he said.