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Tuesday, 31 August 2021

Economy may sputter through 2021

Credit growth solid in July

Housing credit growth picked up to 5.8 per cent in July, according to the latest RBA Financial Aggregates.

Scholars will note the recent acceleration is more relevant than the absolute level of housing credit growth, especially given the low levels of property on the market right now. 

For this reason, expect to see capital cities pushing 20 per cent annual price growth before this cycle tops out. 

Investor credit growth is now rising from all-time lows, up to 2.3 per cent, although overall the cycle has been dominated by homebuyers. 

Personal and business credit growth is still in the toilet, but with overall credit growth in the economy picking up to 4 per cent, there may just be enough residual momentum to see Australia muddle through the remainder of the calendar year. 

The economy was probably slightly positive in the second quarter of the year, will be deeply in contraction for Q3 due to widespread and ongoing lockdowns, but may begin to grow steadily again before the year is out as some restrictions are removed. 

Overall it's a bit of a quagmire, but with New South Wales hitting a record high for its vaccine rollout today, there's some hope that growth may be seen again by the fourth quarter of the year. 


In real time New South Wales is about to go through 7 million doses administered, while Australia will hit 20 million doses within a couple of days.