Australia’s 2-speed SME economy ‘now in overdrive’

Collated headline findings from the latest round of non-bank lender ScotPac’s SME Growth Index Report have shown further proof that Australia’s two-speed small- to medium-sized enterprise (SME) economy is “now in overdrive”.

The survey found that 56 per cent of Australian SMEs are projecting positive revenue growth over the next six months, which was up from 53 per cent on the March quarter of 2024.

At the same time, however, a new high of 34 per cent of SMEs predicted falling revenue by a “record average” of -13 per cent. According to ScotPac, this figure has tripled over the past 10 years.

Additionally, the gap in half-year revenue forecasts across the SME market has broadened to its “largest-ever margin” of 45 percentage points, with the most positive SMEs sitting at 17 per cent, while the most pessimistic at -28 per cent.

ScotPac CEO John Sutton said the widening chasm in revenue projections has once again proved that the Australian economy was “made up of many diverse regional markets”.

“The remarkable positivity of Queensland SMEs is being fuelled by a growing population and increased demand for the State’s abundant natural resources,” Sutton said.

“That is driving our national economy and propping up other markets that are struggling with rising wages, cost-of-living pressures and weakened consumer demand.

“The net result is that the resilience and agility of Australia’s SMEs is again on full display, with a majority of businesses expecting a bounce in revenue to go hand in glove with anticipated falls in inflation and interest rates next year.”

Indeed, the index revealed that 84 per cent of Queensland-based SMEs are forecasting a surge in revenue to March 2025 by an average of 11 per cent. Meanwhile, only 9 per cent of Queensland’s small businesses have predicted revenue declines.

Furthermore, Western Australian SMEs came in as the second-most enthusiastic about their foreseeable future, tying with Queensland at 84 per cent predicting revenue increases, while 11 per cent saw revenue drops within the same period.

On the other end of the spectrum, Victorian-based SMEs were the most pessimistic about growth in revenue, with 57 per cent predicting a drop, compared to 28 per cent seeing positive growth.

SMEs in NSW were markedly more positive than their Victorian counterparts, with 59 per cent of small businesses seeing revenue growth over the next six months, while 29 per cent are bracing themselves for revenue declines.

When looking sector by sector, SMEs in Australia’s mining sector were the most positive with an average expected revenue growth of 5 per cent, just ahead of the transport sector at 3.5 per cent and business services (2.5 per cent).

Small businesses in the construction sector held the most pessimistic expectations at -6 per cent and the manufacturing sector revealed a “gloomy short-term picture” at -2 per cent.

Sutton further said: “Whatever their situation, SMEs should talk to their brokers and advisers regularly about the growing range of tailored working capital options available to support their specific needs.”

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Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.