News

Economic confidence on the rise as Australia moves out of recession

13 November 2020

The Australian economy is showing good bounce as it starts to move out of its COVID-affected recession.

Consumer confidence and property buying intentions are up off the back of reduced bank loan deferrals, ongoing government budget stimulus and eased coronavirus restrictions.

Prime Minister Scott Morrison this week wasted no time telling Australians the country was emerging from recession.

“The comeback is underway, no doubt about it,” he said.

“Confidence is rebuilding in our economy, it is at a seven-year high. That shows Australians getting their confidence back as we emerge from this recession.”

Over at the Commonwealth Bank, chief executive Matt Comyn joined in the positive sentiment by upgrading the bank’s forecasts for employment, GDP and property prices.

But Mr Comyn warned against failing to monitor investors buying into more riskier assets.

“The other consequence of low rates, which we will need to watch closely, is customers seeking riskier assets as a consequence of a very low rate on offer for savings products,” he told Australian Financial Review.

“Whether that is via the sharemarket – and we have seen very strong volume and account growth in CommSec – or whether that is through the housing market, which we have seen pick up.”

Westpac’s Bill Evans told AFR these latest confidence figures definitely showed a strong resurgence in the housing market.

“For now, the boost from record low interest rates is clearly overriding negatives around high unemployment, the overhang of deferred loans, the prospect of withdrawal of significant fiscal support, slow population growth and rising vacancy rates,” he said.

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