The resilience of Australian corporations in the face of increasing interest rates has taken both traders and economists by surprise. Even the CEO of the country’s largest business lender, National Australia Bank Ltd., admits to being caught off guard by the current state of business credit growth. In a recent interview with reporters, CEO Andrew Irvine noted that business credit growth is “surprisingly surprising on the upside” and that the growth numbers have exceeded his expectations.
Australian businesses have shown strength in the face of rising interest rates, with sustained inflation, a tight labor market, and seemingly unaffected house prices. This has led money markets to shift from predicting a potential interest rate cut by the Reserve Bank of Australia to now expecting a 25-basis-point increase in November. Irvine, still relatively new to his CEO role, highlighted industries such as minerals, mining, agriculture, defense, and healthcare as sectors performing well.
Despite acknowledging that some parts of the economy are struggling, Irvine emphasized that there are significant portions of the economy that are thriving. He pointed to the manufacturing sector as one that is experiencing a revitalization as supply chains adapt to be closer to clients. While discussing the economic landscape, Irvine also urged individuals facing financial difficulties to communicate with the bank to seek assistance with any mortgage stress they may be experiencing.
In conclusion, the surprising strength of Australian businesses in the face of rising interest rates has challenged common perceptions about the state of the economy. Irvine’s observations highlight