Director sentiment bounces back despite COVID-19 economic uncertainty

The Australian Institute of Company Director’s (AICD) latest Director Sentiment Index (DSI) has revealed a jump in director sentiment.

The Australian Institute of Company Director’s (AICD) latest Director Sentiment Index (DSI) has revealed a jump in director sentiment, despite the on-going economic uncertainty triggered by COVID-19.

More than 1,700 directors were surveyed for the second DSI of 2020, which was compiled by Ipsos.

Director sentiment remains in pessimistic territory in the second half of 2020 but it has climbed 22.4 points to minus 37.2 even with ongoing restrictions and the historic debt and deficit announced by the Treasurer earlier this month.

AICD Managing Director and CEO Angus Armour said, “The challenges related to the pandemic will continue for some time so it is encouraging to see that despite continued pessimism directors are seeing an improved outlook in some areas.

“The Government’s welcome decision to extend key relief measures has no doubt played a part in easing anxiety. This includes the JobKeeper scheme, changes to continuous disclosure rules and allowing virtual AGMs.”

“Earlier this year directors overwhelmingly favoured a radical policy reset to guide the recovery phase. This survey reveals that directors want a smarter, more innovative Australia that invests in infrastructure and a shift towards green energy,” Mr Armour said.

Directors have once again nominated climate change and energy policy as the policy priorities the Federal Government should address in both the short and long-term.

“The results serve as a reminder that notwithstanding the challenges of COVID-19, Australia still needs to address the political impasse that is climate and energy policy,” Mr Armour said.

Notably, the percentage of directors nominating Engagement with Asia as a priority for the Federal Government has increased significantly since the first half of this year.

China is the only major economic region where sentiment for the health of the economy over the next 12 months is in positive territory.

Respondents were somewhat divided over Canberra’s current approach to China with 28% worried that we are too confrontational, 27% think it is about right, and 26% worry we are too accommodating.

The AICD’s Chief Economist, Mark Thirlwell, said, “The DSI flags the importance of regional engagement in general and of the China relationship in particular, but also reflects the complex challenges around managing our ties with our largest trading partner.

“For example, although a significant minority of directors now worry that Canberra has been too confrontational with China, at the same time just over half of our respondents judge that current policy is either about right or too easy on Beijing.”

Other key findings from the Director Sentiment Index (Second Half 2020) include:

  • The impact of COVID-19 remains the top issue “keeping directors awake at night” but dropped from 68% to 41% of responses.
  • Directors perceive personal income tax and state-based taxes to be the top two priorities for tax reform and a majority of respondents indicated that they thought the level of personal taxation was too high. (Note: survey conducted before 20/21 Federal Budget).
  • Western Australia was the only state or territory to register a net positive assessment of the state economy over the next 12 months. Only 19% of WA directors expect weak economic conditions in the state over the next year.
  • A majority of DSI respondents still believe government spending on infrastructure is too low.
  • 80% of directors expect a rise in the level of mergers and acquisitions over the coming year.


Media Contact: Maegen Sykes 0439 167 567

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