A quarter of businesses in Western NSW are at a "high risk of failure" when the federal government withdraws support that has helped keep the economy afloat during the COVID-19 pandemic.
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The December Business Conditions Survey, conducted by business lobby group Business NSW, showed that NSW businesses "were turning the corner following the ravages of the COVID-19 pandemic", said Western NSW manager Vicki Seccombe.
"The survey shows that business confidence was positive across the state for the first time since June 2018, however much of the survey was completed prior to the Christmas lockdowns."
Ms Seccombe said the survey showed "the resilience and optimism amongst the business community in NSW".
However she warned that the true picture will only be visible once support measures such as JobKeeper, tax relief and interest waivers are wound up.
"The first quarter of this calendar year will be crucial for many businesses as a number of government support packages are also reduced or come to an end," Ms Seccombe said.
Despite "overall increases in confidence across Western NSW", Ms Seccombe said that a quarter of businesses claim they are at "a high risk of failure" when support ends.
"This vulnerability will hang over the small business sector for much of the year, and will need to be factored into decisions about withdrawing support measures."
The survey also showed that an increasing number of Western NSW businesses are looking to expand their capacity to meet demand.