News: MQG Macquarie CEO sees relatively mild economic downturn for Australia

Australia will have a milder economic downturn than its peers, according to the head of Macquarie Group (MQG) , even as persistent inflation means rates at home and elsewhere will likely need to rise higher.

Resurgent population growth, commodity wealth and access to renewable energy will help shield Australia from the economic drag of higher interest rates, Macquarie Group Chief Executive Shemara Wikramanayake said on Tuesday.

"That is going to drive underlying growth here, which will shield the economy from an extended downturn," Wikramanayake said during an opening address at the Macquarie Australia Conference in Sydney.

The remarks came hours ahead of a Reserve Bank of Australia meeting where the central bank is expected to extend its pause to a second month but caution further hikes will follow if inflation stays high.

Persistent inflation in Australia and elsewhere will take action to reign in, Wikramanayake said. Equities are likely to face more pain ahead, she added.

The prospect of slower growth is likely to feature again when bank earnings season kicks off later this week. Macquarie will report on Friday followed by Australia's "big four" banking giants next week.

Long a capital market stalwart, Macquarie has made a concerted push into retail banking over several years and now ranks as the No. 5 mortgage lender in the country.

Analysts expect the "big four" to post strong earnings again, but signal a bumpy second half, and 2024, as credit growth slows and bad debt rises.

Wikramanayake's remarks also took in the impact of artificial intelligence models such as ChatGPT.

"There's a fear that it's going to be the end of employment and jobs but actually employment rocketed as part of the industrial revolution," she said, noting the bank had hired around 2,000 people over the past year.