NAB’s chief economist has declared Australia’s retail sector is “clearly in recession”.
The verdict comes following the release of the NAB’s latest monthly business survey, which interviewed 550 private sector businesses from May 14 – 24.
In figures released this week, the NAB index of business conditions dropped two points in May. A week ago, the Reserve Bank was forced to cut interest rates to its lowest level in history, while Australian Bureau of Statistics data shows the economy has slowed to its weakest level since the global financial crisis in 2009, which plunged the world into recession.
Speaking on the NAB Economics podcast, NAB group chief economist Alan Oster said the situation was “GFC-level terrible”.
“Retail is really, really doing it tough, and it’s getting worse,” he noted.
“While the retail industry has lagged the other sectors for some time, the recent deterioration has seen conditions in the industry fall to levels not seen since the GFC,” he said.
“This suggests that the consumer remains highly cautious with anything but spending on essentials because of ongoing slow income growth, high debt levels and possibly some concerns over falling house prices.”
Oster added that while he did not want to “over-emphasise” the gloomy outlook, “readings of -27, which we’ve got in retail, is so grim”.
David Koch noted in a News Corp column that some economists are tipping up to three more interest rate cuts in the next 12 months, “which would certainly reflect recession like conditions”.
Drinks Association network breakfast: sustaining drinks growth in a slowing economy
Westpac Senior Economist Elliot Clarke will discuss the risks and opportunities ahead for business and the outlook for the Australian dollar at the Drinks Association’s upcoming Network Breakfast.
Clarke has been with Westpac Economics for nine years, having previously worked at the Reserve Bank of Australia. Over his career, Clarke’s focus has been on Australia’s place in the global economy, assessing economic and financial developments in Asia for the RBA, and now as he manages Westpac’s global economic and financial market forecasts, with a particular focus on the US, Europe and China.
According to Clarke, 2019 has seen a strong rally in global equity markets and a stabilisation in world growth, most notably in China. He notes that Australian exporters have benefitted from these developments. However, our domestic economy has come under significant pressure from declining wealth and high household debt, leading to calls for the RBA to cut interest rates and for the government to cut taxes or increase expenditure.
Following the 2019 Federal election and ahead of expected interest rate cuts from the RBA in August and November, his update will give a global overview, while exploring the impact of poor wages growth, high household debt and declining house prices and affordability.
His presentation will explore growth divergence in Australia, in the wake of NSW providing about half the nation’s economic growth in the second half of last year, despite the state having less than a third of Australia’s population, plus the RBA and currency outlook.
Additionally, Clarke will examine opportunities in Asia through service exports and population growth.
This is a not-to-be-missed expert perspective for the drinks industry on the economic prospects for Australia over the coming 12 months.
The network breakfast will be held on June 19.