WA firms to weather economic storm sparked by SVB collapse: CommSec chief economist
WA businesses will continue to weather the economic storm even if the fallout from the largest US banking failure since the 2008 financial crisis reaches Australia, a chief economist has said.
Speaking in Perth on Wednesday, CommSec chief economist Craig James said Australian banks had “strong” capital and liquidity buffers, which were above the Australian Prudential Regulation Authority’s regulatory requirements.
“We’re not going to be immune should there be a banking contagion but we’re well and truly in the box seat,” he said at an event hosted by RSM.
“We are in a very, very good position should there further unravelling (of) the banking sectors in other parts of the globe.”
American lender Silicon Valley Bank failed earlier this month, triggering a global strain on bond markets that risked being further exacerbated by the collapse of Credit Suisse.
Swiss baking giant UBS agreed to take over its ailing rival after a weekend of negotiations.
Mr Daly said the Australian economy continued to be in a “pretty good shape” compared to other countries.
“We’ve got a jobless rate sitting at the lowest levels in around about 50 years, it’s something that we’ve struggled to achieve over a long period of time,” he said.
“We’ve got a trade surplus … unlike the US, which is in deficit.
“The last time we had broader trade surplus and current account surplus was back in the 1970s.
“The more that you look at our macroeconomic settings, the more that you have confidence in the outlook for our economy.”
He added house prices across Australia were “adjusting to a more normal situation” and beginning to “flatten out”.
He said there had been benefits that came from the resilience of the Australian economy, including the creation of about 275,000 new businesses across the country since the COVID-19 pandemic.
In WA, about 20,000 new businesses were created since March 2020.
Mr Daly said the challenge now was to determine which of those businesses offered a unique offering in order to survive.
“If (businesses) come up with something which nobody else is doing and you’re nailing it and it’s getting the quality right then you’re likely to do very well,” he said.
“If people focus on just too much on trying to keep their costs low without focusing on the other side, then they will face a little bit of a losing game.”