In recent months, the resilience of corporate Australia to rising interest rates has left traders and economists alike in awe. Andrew Irvine, CEO of National Australia Bank Ltd., was no exception to this surprise. He admitted that he too was taken aback by the current business credit growth, which he described as “surprisingly surprising on the upside.”
Irvine highlighted several key factors contributing to the strength of the Australian economy, including sticky inflation, a tight labor market, and resilient house prices despite high borrowing costs. Money markets have shifted from expecting a rate cut from the Reserve Bank of Australia to now pricing in a 50% chance of a rate increase in November.
Industries such as minerals, mining, agriculture, defense, health care, and manufacturing were identified by Irvine as key drivers of economic growth. He emphasized that there are parts of the economy that are thriving despite often being overlooked.
Irvine urged individuals facing financial difficulties to communicate proactively with their lenders to address any potential mortgage stress. Overall, the robust performance of businesses in Australia has defied expectations and contributed to the country’s economic resilience.