Most forecasts are for a slowdown next year - 8.8 per cent, according to the Department of Finance, and gliding down to 6.3 per cent in 2002. This is called a slowdown, but what 8 or 6 per cent growth translates into is not a slow economy. If business confidence is influenced by macro-economic forecasts, talk of a slowdown in this context is in danger of making people too cautious. Because just as we never had an 11 per cent growth rate before the present boom, we have never experienced what it is like to come down from that to 5 or 6 per cent. In previous times, a 5 percentage point change in growth would have put us into negative growth, a recession.
People find it hard to relate to macro-economic statistics.
We know that the last year is what 11 per cent feels like. The difference with a possible 8 per cent next year will not be hardship. On a micro level, business confidence is now tinged with a caution arising from difficulties in finding and retaining people. The vulnerability of management in a sellers' market for labour is a new reality. It is hard to know when a factor like the exchange rate or difficulties in hiring people is a challenge to be managed and which does not dent confidence, and when it begins to look more insurmountable and to undermine confidence.