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Westpac says Aussie economy will be a 'strong growth story' in 2022

Business

Westpac expects 2022 to be a huge year for Australia as billions flow back into travel and tourism as house prices continued to grow and Australia became a world leader in vaccinations.

 

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Brisbane house prices will peak at 22 per cent growth this year and would rise another 10 per cent in 2022 with a small fall in 2023 of about 1 per cent, according to the bank’s senior economist Bill Evans.

The growth in the Brisbane market next year would be much higher than Sydney and Melbourne, but he tipped Sydney to reach a record in growth this year with severe affordability issues, as well.

He said investors would continue to push up house prices but the affordability issues would mean regulators would probably end some types of lending.

Unemployment nationally would fall to a record low of 3.8 per cent and that would put pressure on wages and inflation. Economic growth would rise by 7.4 per cent.

Evans said 2022 would be “a strong growth story”.

“Next year will be about the consumer. They have accumulated so much in savings,” he said.

He said people who don’t normally save money but had been forced to by lockdowns would be winding down those levels of cash. Those who did normally save would also have money to spend.

“A lot of that spending will be in the travel sector,” he said.

“Opening up domestic borders will free up spending.”

He said Australians spent $56 billion in international travel in 2019 and that flow of money would start returning in 2022.

Evans also predicted Australians would be once again world leaders in the handling of the pandemic and “would be proud” again of the handling of the issue.

“The vaccine rates in the US and UK have been ahead but they are flattening and we are continuing to strengthen,” Evans said.

“We will be proud of vaccination rates of above 90 per cent. There will be no more snap lockdowns and much more freedom.

“We can be incredibly optimistic that we are going to put the world to shame in 2022. We were world leaders (in the Covid response) in 2020, laggards in 2021 and 2022 will see a return.”

He said the bank was seeing a turnaround in credit card activity and there was a big flow to airlines and travel agents.

 

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