Confidence in the economy and in business conditions has declined dramatically in the second half of 2024 - Director Sentiment Index 2H 2024

Pressure is coming from the cost of living, inflation, interest rates, low productivity and problems in the housing market

The Director Sentiment Index (DSI) has dropped to its lowest point since the pandemic, with directors more pessimistic about business conditions and the economic outlook both globally and in Australia.

The overall DSI is now -33.6, a drop of more than 14 points since the first half of the year, with cost of living pressures, inflation, tight monetary policy and low productivity growth weighing very heavily on sentiment.

Significantly more directors (46%) believe that Australia could fall into recession within the next twelve months. And more than 56 per cent believe the RBA’s current interest rate settings will cause a major uptick in business insolvencies.

Domestic economic conditions are now equal with cyber-crime as the number one issue keeping directors awake at night, followed by legal and regulatory compliance.

AICD Managing Director and CEO Mark Rigotti said it was clear that regulatory burden continues to be a major issue for directors.

“This becomes even more pronounced when businesses and their boards are forced to turn their attention to the daily challenges arising from the weaker economy and deteriorating business conditions.” - Mark Rigotti MAICD, CEO AICD 

• 61% say compliance & regulation is the main factor affecting their board’s risk appetite
• 35% say productivity is the top short term issue for the Federal Government to address followed by housing affordability & supply (33%) and energy policy (25%)
• Climate change (33%) remains the top long term issue followed by the ageing population (29%) and productivity growth (28%)
• 83% agree there is still a skills shortage in the Australian workforce
• Over 60% say flexible work arrangements have a positive impact on staff recruitment, retention, and health & wellbeing
• Over 40% say it has a negative impact on innovation and cyber security
• 51% don’t believe the level of diversity on Australian boards is satisfactory