By David McIntyre
The attitude of small and medium businesses to the Australian economy has dramatically improved over the last three months, with most expecting activity to expand or remain the same.
A survey conducted at the beginning of August by financial services firm KPMG released on Monday shows that 43 per cent of responding businesses expect the economy to expand, 39 per cent expect the level of activity to stay the same, and 18 per cent expect a contraction in the next six to 12 months.
The same survey conducted in April showed that 58 per cent of respondents expected the economy to contract.
The attitude to the government's stimulus spending showed a similar turnaround, with 62 per cent of respondents around the beginning of August saying it slowed the recessionary impact in Australia. In April, 66 per cent of the respondents didn't think the stimulus package would stimulate the economy.
Businesses are also predicting that interest rates are more likely to rise.
Of the respondents, 41 per cent expect the official interest rate to rise in the next six months, 57 per cent expect them to stay the same, and none of the respondents expect a decline.
"Three months ago 82 percent of businesses predicted a further lowering of interest rates, the staggering difference in this quarters survey really highlights the perception that the economy is picking up," KPMG managing partner Graeme Matthews said in a statement.