NAB’s Chief Economist has spoken out about the state of the economy and the key factors that are driving the COVID-19 recovery in Australia.
Alan Oster, who has been at NAB for nearly 30 years, spoke to the NAB Economics podcast about the road back from the pandemic, with business investment top of mind.
“In the NAB Business Survey, capital expenditure and capacity utilisation were both at record levels, so it was saying that we should be seeing business investment soon,” he said. “We did see, in December, a kick up in plant and equipment, which was correlated with the instant asset write off and cars being bought in fleets.”
For brokers, that creates opportunities in the commercial space as businesses begin to look for financing to move forwards.
“We would expect that business investment would continue to improve, and particularly improve into the June quarter,” added Oster. “When we look at our own applications for new loans, we see quite a kick. It’s not showing up perfectly in total business credit because a lot of people are paying off debt, but we are getting a lot of enquires – I think it’s up 30 to 40% - so it’s a pretty big improve and I would hope to see it improve.”
Oster presented a far more optimistic outlook than the Federal Government did in last week’s Budget.
“The one thing that we’ve said before is that the part of the Government forecast that I really don”t understand is that they have business investment not increasing at all in 2022/23. We end up at the same place in terms of GDP, but they have much stronger consumption and not as bad a detraction in exports. But if you’re relying on consumption to drive you, I’m a bit nervous.”
“I’d prefer to see our forecast of business investment coming sooner rather than later and that would make me feel much more comfortable.”
Listen to the whole podcast here.