The outlook for the domestic economy is strong, with business investment rising as Australia emerges from the COVID-19 pandemic, according to the head of National Australia Bank.
“The Australian economy has great momentum, and business investment is coming through as we come out of the pandemic,” NAB CEO Ross McEwan said while speaking to bank staff in Adelaide. “We see more momentum building over the next couple of years. Budget measures to further encourage small business investment, such as tax and encouragement to digitise, are welcome. The reduction of fuel excise tax and minor tax changes are also positive at a time when household budgets are starting to feel cost-of-living pressures.”
In the federal budget on Tuesday, Treasurer Josh Frydenberg announced $1 billion in tax relief for companies to invest in new technology, The Australian reported. The budget also included $550 million to encourage small businesses to train new staff and upskill existing employees.
McEwan told NAB employees at Adelaide Town Hall that he had been visiting South Australia customers after two years of pandemic-induced restrictions.
“I’m really encouraged by what I’ve seen and heard. I think South Australia is in for a pretty good few years,” he said. “Cyber is the future, and you’ve got a pretty amazing cyber centre down there … and a space operation down there that is absolutely world-class.
“We just need to get more people in South Australia to get this economy going again, and you’re already starting to see that growth coming through,” he said. “Business is vibrant, your businesspeople are very confident about what’s going on, so you’re in a good space here in South Australia, and we’re ready to fund it.”
The SA economy posted strong performance over 2021, The Australian reported. State final demand rose 5.4%, finishing the year 5.9% higher than its pre-COVID level. While business conditions worsened in January with the Omicron wave, they rebounded in February.
NAB said the outlook remained positive, but growth was likely to slow in 2022, as the recovery was already well-advanced.
Nationally, NAB said that COVID-19 was still a source of disruption, although its impacts were transitory. There was a strong recovery in New South Wales, Victoria and the Australian Capital Territory, all of which were impacted by lockdowns last year, The Australian reported.
NAB said that in the last six months or so, key risks for the economy had shifted, with lockdowns and border closures largely a thing of the past. The key economic question now is how quickly spending patterns, trade in international services and population growth will normalise, the bank said.