Businesses must shift from prediction to resilience, BDO economist says

While the shocks of the energy crisis are becoming visible, the full impacts are yet to unfold, BDO chief economist Anders Magnusson has said.

“For many businesses and individuals, the environment may start to feel recessionary, characterised by weaker demand, rising costs, and growing uncertainty … Policy responses are increasingly focused on managing risk rather than resolving it,” he added.

As previously reported by Accounting Times, the consumer price index (CPI) has fallen to 4.2 per cent in April; however, core inflation remains high.

“Headline inflation was always going to moderate a little, but remain elevated in April, while energy prices stayed high, but the more important signal is that trimmed mean inflation has started to rise,” Magnusson said.

“The situation has evolved, but the core risks remain firmly in place. While some of the immediate pressures have eased, the underlying drivers of the crisis continue to present a challenging outlook for businesses, households, and policymakers.”

The still heavily restricted Strait of Hormuz remains a driver, causing a continued fluctuation of oil prices in response to sentiment, remaining elevated compared to pre-conflict levels. However, Magnusson noted a modest improvement to Australia’s fuel reserves supported by intensive government efforts to secure supply, through the halving of the fuel excise to bring prices closer to pre-conflict levels until 30 June.

With the increase in unemployment in March and rising prices creating a squeeze on living standards, wages are failing to keep pace with the cost of living.

Magnusson called on businesses and leaders to plan across multiple scenarios and shift from prediction to resilience in their operations and decision-making processes. He emphasised the importance of “understanding exposure to energy costs and interest rates, strengthening supply chains, and stress-testing financial assumptions against both optimistic and pessimistic scenarios”.

“The path forward remains uncertain, but the implications of different potential outcomes are clear. The energy shock is not a short-term disruption. It is a structural challenge that will continue to shape economic conditions in the months ahead.”