The Australian economy is “weak, but relatively benign”, despite low interest rates and unemployment levels, the CEO of a mortgage insurance group has revealed.
Speaking to Mortgage Business' On the Record, QBE LMI CEO Phil White noted that a joint report from QBE and BIS Shrapnel revealed that while the Australian economy has “grown quite nicely”, with GDP growth figures up from 2.2 to 2.9 per cent this year, there were still “signs of weakness”.
Mr White said that despite low interest rates and unemployment levels below 6 per cent, consumer confidence wasn’t “quite translating into spending”.
“We’re also seeing [that] business confidence isn’t growing either and that most businesses are still looking really at cost containment measures more than property investing in long-term growth,” he said.
While Mr White added that banks’ recent rate hikes would “change the picture a little bit” and “add cost into people paying their mortgages”, he said he did not expect these hikes to be significant and “therefore shouldn’t really paint default or arrears rates within the market to any material level”.
Overall, Mr White said he expected GDP and inflation to stay within the RBA’s limits, though at the lower end of the spectrum, and that the economy would not be a major driver of housing.
“[W]e see the economy is weak, but relatively benign … as long as interest rates stay roughly where they are and unemployment stays low,” he concluded.
[Related: GDP result ‘shockingly weak’: ANZ]