Financial Times World Stock Index 7 – 15 November 2023
Source: Financial Times
Cooling inflation rates around the world have raised hopes for an end to interest rate hikes by central banks, which of course affects the interest rates that small businesses and franchisees have to pay on borrowed capital. Although those banks in the United States, Australia and New Zealand have not indicated when any rate cuts are likely, some economists are picking early-to-mid next year, although that may be optimistic.
Changes in Food Prices by Subgroup October 2023
Source: Statistics New Zealand
In the meantime, food and grocery prices in New Zealand actually fell in October, which may have a more-immediate impact on consumer demand. For small business owners, franchisees and franchisors, lower inflation means lower costs for raw materials, supplies and other operational expenses, which can help improve profitability and provide more room for growth and expansion.
All of these factors have resulted in an upward trend in business confidence in the United States, the United Kingdom and New Zealand, but labour shortages are still a concern in New Zealand as this graph shows.
Business Confidence Factor Constraints
Source: New Zealand Institute of Economic Research
Does all of this mean that we can expect a better year in 2024 than we’ve had so far in 2023?
It’s important to note that these are general trends and the actual impact can vary based on numerous factors including specific industries, locations and individual business strategies. For this reason, small businesses and franchises should continue to monitor the economic environment and adjust their strategies as necessary to maximise these potential benefits.
What are your thoughts?