NAB chief executive Ross McEwan says he thinks Australia can avoid a recession, but believes soaring inflation and interest rate rises will hit the hardest early next year.
McEwan, who spoke on ABC Radio National this morning, said Australia’s resource-based economy meant it might not follow other countries into recession as central banks hike interest rates to crunch the economy and tackle price rises.
“I think we can avoid a recession, but it is going to get more difficult to squeeze out inflation,” McEwan said.
McEwan also added that he believes Christmas spending will still be relatively strong despite lower consumer confidence, but added that the full impact of rising interest rates on household budgets may appear early next year.
“Let’s see what happens in the January, February spend before we get too excited because I think people are out there feeling pretty good about being up and about and I think probably the first quarter of next year is crunch time,” he said.
McEwan also called for greater industrial relations simplification as the Albanian government pushes to pass its controversial industrial relations bill.
“The first thing our clients, particularly the small businesses, are telling us is it’s all too complex anyway. Let’s start by simplifying some of the regulation around how they pay people – not the amount they pay – but how they pay and all of the conditions and things that they have to put in place,” McEwan said.
“It’s just so complicated, most are struggling just to keep up with what’s out there today.”
McEwan said there was a need to increase wages in low-paid industries, such as the aged care and health sectors.
“But employers are having to move rates just to get hold of people at the moment and that’s the market working as it should,” he said.
McEwan could not say whether NAB would campaign for or against Labor’s proposed IR bill because the bank was waiting to see it in detail.