Australia is currently on its 26th year of consecutive annual economic growth with an average GDP growth rate of 3.3 per cent, reports AusTrade. On one hand, this demonstrates a country that provides a low-risk environment to do business with both domestically and internationally. But the other hand holds more scepticism of how long a single country's prosperity can last.
Such scepticism, of course, stems from watching other economies come to a standstill under a slow economy.
Greece's infamous economic crisis
Let's first analyse one of the most famous economic crises in recent times – Greece.
Greece saw its "golden years" in the 1960s for about a decade. Its annual growth rate averaged about 8 per cent, and at the time, it was performing competitively with all the other European economies. However, an oil crisis in 1973 set off a couple of decades of depression, high inflation, stagnant economic activity and high unemployment.
Now, this country's sovereign debt has put serious strain on the European Union and it has lost 26 per cent of its GDP since 2007, reported the Financial Times. Since then, the economy has shrunk 25 per cent as spending cuts and tax increases from creditors have resulted in fear of Greece's inability to rebound.
Japan gearing up for a slow economy
Recently, attention has turned to Japan. In 2015, Japan's economy shrank at a rate of 1.4 per cent, a result of 20 years of deflation. Japan then started to see weak consumer spending after the stock market slowed and property bubbles burst, explained the World Economic Forum (WEF).
The problem is only mounting as Japan's population continues to age. WEF reports that by 2020, the country will lose 600,000 people a year, and getting any type of economic growth from a shrinking population is going to be a challenge.
India's current economic slowdown
Right now, the most recent economic slowdown is happening in India's economy. The World Bank's President Jim Yong Kim has described India's economic growth as an "aberration" due to temporary disruptions in the Goods and Services Tax (GST). In a recent conference on the matter, Kim explained that he believes the slow down will be temporary.
There's been a deceleration in the first quarter, but we think that's mostly due to temporary disruptions in preparation for the GST, which by the way is going to have a hugely positive impact on the economy," he said.
In order to control the slowdown, India has to overcome challenges including education and health.
Staying alive during a slow economy
While Australia continues to work towards its 27th year of growth (the OECD expects another 3 per cent by 2018), it's important to learn lessons from Greece, Japan and India. Businesses need to be prepared for every economic outcome in order to weather the storm more easily.
So the question remains: can you grow your business during a slow economy?
It's not impossible. For one, Australian trade has a great deal of reach all around the world – the Australian Chamber of Commerce and Industry has international trade reaching $662 billion from 2015-2016.
No matter what your client base looks like, you will need to be smart and proactive about finances. Protecting your invoices with trade credit insurance is priority number one. Once you know your finances are in order, you can start to focus on the people and the strategies that can keep them on board.
Staying alive during a slow economy next comes down to those external customers. A slow economy makes others nervous, so paying attention to customer service will be more important than ever. Not only does focusing on your clients help with retention, but it could also help with networking and growing your client base. Customers want to see innovation and resilience during hard times.
Is your business prepared for a slow economy? Contact the team here at Coface to learn more about how your business can benefit from trade credit insurance.