was successfully added to your cart.

Measuring Economic Uncertainty and its Effects – a Paper from the Reserve Bank of Australia

The Reserve Bank of Australia recently released a draft discussion paper exploring the development of an uncertainty index, to measure the degree of economic uncertainty within Australia. The discussion paper identifies a number of variables that provide a potential indicator into the degree of economic uncertainty.

While uncertainty is more likely to occur during poorer economic conditions, the index can rise during better times, if there are unexpected economic occurrences. Factors identified in the report include sudden changes in monetary policy, foreign economic conditions and recessions. Interestingly, Commonwealth elections also appear to create a degree of economic uncertainty, particularly if the potential result is largely unknown.

Uncertainty has a significant impact on Australian businesses, with larger decision being delayed. The index identified a slowing of employment growth, as well as machinery and equipment purchases. Similarly, there are likely to be delays in strategic marketing planning, despite the opportunities that exist during economic uncertainty.

2016-05-13 Uncertainty

We previously explored Proctor and Gamble, which developed a strategic approach to identifying new customer segments during the Great Depression. Their strategic approach, supported by research and insights, enabled Proctor and Gamble to experience growth at a time that many others failed.

Proctor and Gamble was able to experience this growth because it developed a strategic marketing plan at a time when many others hesitated due to uncertainty. Planning is even more essential during uncertain times as it provides the ability to evaluate alternatives and to mitigate risk.

According to the index Australia’s overall level of economic uncertainty is currently below average, but is trending upwards. Rather than enable uncertainty to be an excuse for indecision, it should renew the need for a strategic approach that can uncover market opportunities.

The full draft discussion paper can be viewed through the Reserve Bank of Australia at www.rba.gov.au/publications/rdp

 

Alex Makin

Author Alex Makin

In a career spanning over fifteen years, Alex has been instrumental in transforming, reinvigorating and growing the capacity of businesses and not-for-profit organisations. He is a visionary who understands the big picture. Alex's expertise is a Certified Practising Marketer and as Chair of the Victorian State Council of the Australian Marketing Institute. Alex is also an accomplished speaker, author and mentor and former Mayor and Councillor for the City of Maroondah.

More posts by Alex Makin

Leave a Reply