Half of mid-market business leaders warn of no growth in 2026: KPMG
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The news: Almost half of the CEOs of mid-market businesses surveyed by KPMG expect no real growth over the remainder of 2026 amid rising interest rates and surging fuel prices. And very few are optimistic about their medium-term prospects.
The numbers: KPMG’s Mid-Market Pre-Budget Pulse Check surveyed 150 CEOs of “mid-market” businesses, which are largely privately- or family-owned businesses, with revenue between $10 million and $1 billion.
Of these leaders, 47% do not expect real growth over the rest of the year and only 6% are optimistic about their ability to secure 10% growth or more over the medium-term.
About one in four were expecting a “moderate to notable” reduction in their investment activity, with around 14% expecting a small reduction and half anticipating no changes.
Cost and margin pressure was the biggest challenge for 34% of businesses, with regulation at second place with 32% saying this is a major challenge for the next three years. Geopolitical uncertainty ranked third at 27%. Fuel and energy costs was the primary concern of 18% of respondents.
Almost one in four said recruiting and retaining skilled staff is their biggest challenge.
The context: The survey indicates the policies with the most support from these businesses is for the government to cut red tape (64% support), retain the instant asset write off (44%) and help boost critical manufacturing (41%) at the upcoming 12 May budget.
There is also substantial support for major tax reform (50%), with lifting GST garnering the most approval (50%). Changing capital gains tax was “broadly rejected” by those surveyed with only 17% supporting this move. About 28% would support a wind back of negative gearing.
What they said: KPMG mid-market and private tax partner Kaylene Hubbard said mid-market businesses want to see a “clear signal from policymakers that they will cut through the regulatory clutter to enable the mid-market to innovate, expand, and adapt in an increasingly volatile economy”.
The biggest opportunity that business leaders are eyeing for the future is improved digitisation, with almost half putting this at the top of the list. Integrating AI was a close second at 45%, followed by 43% citing diversifying into new markets, products and services.
“The mid-market understands that integrating AI is not just about efficiency but about securing a competitive edge right here in Australia,” Hubbard said.
The source: KPMG Mid-Market Pre-Budget Pulse Check
