Corporate Australia’s resilience to rising interest rates has caught traders and economists off guard in recent months. National Australia Bank Ltd. Chief Executive Officer Andrew Irvine acknowledged that he too was surprised by the current business credit growth, which he described as “surprisingly surprising on the upside.”
Irvine highlighted the strong performance of Australian firms, noting 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 the economy’s strength. He emphasized that there are parts of the economy that are thriving, despite the focus often being on those facing challenges.
Irvine urged individuals facing financial difficulties to communicate with their lenders proactively 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.