The Australian economy is undergoing dynamic changes, with inflation and record-low unemployment rates a leading factor, an economist says.
Stephen Koukoulas (pictured above), senior economic adviser to former prime minister Julia Gillard from 2010-2011, gave the opening speech at the Finsure Commercial and Diversified Finance Summit in Sydney on Wednesday, saying it was an interesting time for change in Australia.
“We are going through urgent issues that are seldom seen in our economy,” Koukoulas said. “We are all aware inflation is very elevated at a 30-year high and we predict inflation will creep higher to 6.5% or 7% as the domestic economy is performing strongly, by pushing the costs of goods and services up.”
In his speech, Koukoulas said Australian business owners were struggling with a worker shortage as the unemployment rate fell to 3.9% in March, its lowest level in 50 years.
“The cost for business owners opening their doors is going up at the highest rate in over 30 years,” Koukoulas said. “Overdraft of business debt would be increasing as well as paying staff wages. However, it’s not all bad as business owners can increase their selling prices to maintain margins, but in recent years they might be nervous in losing market share if the competition undercuts them.”
Koukoulas said the economy was strong and economic growth was sitting at 3.5%.
“This is good especially after the COVID recession,” he said. “Consumer demand is strong and we should be proud of the strength of the economy. We have put a lot of money into the economy over the last two years and it is now performing very well.”
Koukoulas said dwelling wealth was booming, which came as no surprise, despite housing growth beginning to slow.
“We know the impact of higher interest rates will impact how much we can borrow, with tightening of credit and risks associated with borrowing limits affecting consumers,” he said.
Koukoulas said if you were employed with a large mortgage and you were getting a pay rise, you might not like interest rate hikes, but you could still manage the repayments.
“Those in this situation might even consider upsizing and buying a bigger and better house,” he said. “The rising cost of living concerns are still there; however, now is still a great time to buy a property.”
The in-person event was attended by 115 Finsure broker members with more than 30 lender representatives.
“We now have over 2,400 Finsure members who are writing approximately $30 million in loans per month, and over $3.2 billion in commercial loans,” said Finsure national commercial manager Jas Fazlic.
The two-day event also features keynote speakers Finsure CEO Simon Bednar, NAB executive of broker distribution Phil Waugh and personal trainer Michelle Bridges.