Chris Richardson, a keynote speaker at the marcus evans CFO Summit 2023, shares his economic vision for 2023

1. Interview with: Chris Richardson,
Economist
“We live in a volatile world. Spending
time thinking about different scenarios
for the future is among the best
investments senior managers and
boards can make at the moment,” says
Chris Richardson, Economist.
Richardson is a keynote speaker at the
marcus evans CFO Summit 2023.
How is the global economy shifting?
What do CFOs in Australia need to
know?
The world economy is seeing the
sharpest tightening of policies in several
decades. Government support and covid-
related spending is less, while central
banks are raising the cost of money
very fast amid a burst of inflation. That
means the backdrop for the world
economy is difficult and getting even
more challenging, with everyone
tightening at the same time. So there is
a chance that the coming global
slowdown will be even bigger than
various authorities expect it to be. The
additional complication is China. China’s
changed covid policies mean consumer
spending is recovering fast. However,
its demographic and structural
challenges are large, and economic
growth is no longer the focus of the
Chinese authorities in the way it once
was.
This backdrop is a tricky one for
Australia, and we will share in the global
slowdown this year – especially given
that the Reserve bank remains on the
warpath. But if we look at 2022,
Australia saw less of an increase in
inflation and interest rates than the rest
of the world. Its economy slowed down
less than others. There is a reason to
believe Australia will continue to
outperform the world this year.
However, that doesn’t mean we won’t
see a slowdown or rising unemploy-
ment. For CFOs, the operating
environment in 2023 will be increasingly
difficult, although it may well be easier
for Australia than many other nations.
What business strategies would
serve CFOs well in this environ-
ment?
2023 is likely to remain a year where it
is better to focus on defence than
offence. CFOs might not see big
increases in sales, so continuing to
focus on their costs will be the surest
path to maintaining margins. There are
years where taking on risk is smart, but
at this stage, it doesn’t look like 2023
will be such a year.
That’s why CFOs must absolutely plan
and think of the challenges and
opportunities. Geopolitics, politics and
economies are more volatile now.
Spending time thinking about different
scenarios for the future is among the
best investments senior managers and
boards can make at the moment. War
game some scenarios. What would you
do if this or that happened? When you
don’t know where volatility will come
from, there is great value in being
nimble and having thought of how your
organisation will respond to rapid or
unexpected changes. There has never
been a greater advantage to being
ready to adjust in the face of events.
What opportunities would you
highlight?
Profit margins in most sectors are in a
very good shape and likely to remain
strong. Cost pressures in some sectors
will start to lower towards end 2023. For
example, cost pressures in construction
are extreme right now, but chances are
they will be less damaging by the end of
2023. More broadly, inflation may well
come down faster than many CFOs
expect. That is the good news, and
there are opportunities in that.
Nevertheless, even if inflation comes
down faster than most expect, it is not
clear if interest rates will do the same.
Central banks are very averse to
inflation. There is a lot of medicine in
the system to bring inflation down but
that will hurt economies along the way.
When economies are hurt, your
revenues are at risk.
What government policies should
CFOs plan for?
It’s a relatively new federal government
in Australia. Most new governments
don’t promise major change, which
limits the policy changes they can bring
in. But the current federal government
has managed to buck that trend and has
been more activist than its campaign
promises implied – in some ways
successfully so, and in some ways not.
However, it is not clear if they will stay
activist. Towards the end of 2023 when
the next elections will be on the horizon,
its recent activism will start to moder-
ate.
There has
never been
a greater
advantage to
being ready
to adjust in
the face of
events
The Challenges and Economic Future
that CFOs in Australia Need to Plan for

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