Business chiefs more cautious in 2017: Ai Group

Fresh from a year that delivered major political shocks and proved tougher than expected, Australian business leaders are taking a cautious approach to 2017.

Fewer chief executives expect to see business conditions improve than a year ago, though there are more forecasting a stable environment, according to the latest CEO survey by the Australian Industry Group.

Despite the exacerbation of long-standing concerns about slow global growth and political volatility in the second half of 2016, Australian bosses are cautiously optimistic about the year ahead, Ai Group chief executive Innes Willox said.

"They are more likely to see themselves steering their businesses along expansionary paths than has been the case in recent years," he said.

"This outlook comes after an extended period of only very gradual recovery from the global financial crisis and amid the major transitions underway in the wake of the recent mining investment and commodity price booms."

Many of the foundations for better domestic economic growth were in place, including low interest rates, low wage and inflationary pressures, and low unemployment, Mr Willox said.

A weaker Australian dollar, stronger commodity prices and a recovery in national incomes were also factors, he said.

"The fate of the Australian dollar is a key swing factor. In 2017, it will remain one of the key risks to export performance and to the economy more widely," Mr Willox said.