Major banks say the worst of Covid is over
THREE of the four majorbank chiefs believe the nation has seen the worst of Covid-19, amid expectations of a $1bn spending surge in Victoria alone over the coming week as the state gets back on its feet after a punishing lockdown.
ANZ CEO Shayne Elliott, National Australia Bank boss Ross McEwan and Commonwealth Bank head Matt Comyn all expressed optimism, pointing to a forecast buffer of $230bn in extra savings – equal to 11.5 per cent of GDP – by the end of the year.
“And with fiscal policy still in expansionary settings, there are strong reasons to look forward to a brighter future,” Mr Comyn said.
Mr Elliott said the unprecedented cash buffer came with “not a lot of debt” in the business sector, as companies had mostly avoided borrowing to survive.
Furthermore, he said, the Covid-19 experience was that spending bounced back quickly once lockdowns were removed and the “economic juice” started to flow.
The ANZ chief, however, sounded a cautionary note, saying small businesses owners would naturally feel cautious after going through the “most hellish experience of their lives”.
“We have an organism that mutates and changes and there’s going to be some slightly subdued levels of confidence – some businesses might stock up by only 80 per cent,” he said.
Mr McEwan said the reopening of NSW and Victoria was the “booster shot” Australia needed, together with growing clarity on the reopening of borders and resumption of flights. “I am increasingly confident that the worst of the Covid-19 economic impact is now behind us; we are reaching the light at the end of the tunnel,” he said.
“Australians have shown incredible resilience in a difficult year and they are ready to embrace a return to freedoms.”
Mr McEwan said businesses were growing in confidence that the “stop-start” conditions were over, and that they could order stock and hire and train staff without fearing that their investments would be wasted.
Major-bank data highlights the strength of the snapback in NSW – spending jumped 13-15 per cent as the state emerged from lockdown.
NAB expects a similar spike in Victoria, which would mean an extra $1bn circulating in the state economy next week, starting mainly in retail and hospitality.
Mr Comyn acknowledged there was still uncertainty about the short-term outlook, but said there were numerous reasons to be optimistic about the rest of this year and especially into 2022 when the Australian economy was likely to grow strongly.