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Weak economy sees companies look offshore

Apr 27, 2015

The subdued outlook for the Australian economy is forcing companies to look overseas for ways to grow their business, according to new research.

According to professional services giant EY’s Australasia Capital Barometer, the weak economic environment has seen many companies abandon plans to look for acquisitions or else search for opportunities overseas.

Only 44 per cent of the company executives surveyed were looking for new acquisitions, compared to two-thirds of respondents six months ago, and 70 per cent of those were looking overseas, rather than at home.

“Against a backdrop of local currency weakness, lower domestic growth expectations and commodity price volatility, local executives are rethinking their approach to M&A (mergers and acquisitions),” EY’s Oceania transaction services leader Julie Hood said.

All the executives surveyed expect the global economy to remain stable or improve, but fewer than half expect conditions to improve in Australia, with many citing weak commodity prices, political instability and slower growth in key markets.

The Australian economy, which has recorded average annual growth of well over three per cent over the past 50 years, grew by just 2.6 per cent during 2014 amid a continued slide in commodity prices due in part to slowing demand from China.

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