Firms are altering their strategies quite quickly, looking to conserve cash, pay down debt and reduce costs. They are also experiencing tougher credit conditions. Indications are that investment plans, which had been exceptionally strong in the middle of last year, are being quickly curtailed.
Households, for their part, are affected by a significant loss of wealth, especially over the latter part of last year, and are understandably tending to save more and, in many cases, looking to get their debt levels down. That said, measures of consumer confidence and consumer spending in Australia have held up much better than in many other countries over recent months.