Demand for credit saw an uptick last year, data shows
Businesses in regional and rural Australia have gone from strength to strength in the past year, recovering in the wake of a bust-boom cycle of drought years and the COVID-19 pandemic, and are now well placed to consolidate their gains in the year ahead, according to a new NAB report.
“While nobody can deny the cost-of-living pressures across all parts of Australia, we are seeing a new baseline set for sustainable and resilient growth in regional and rural Australia,” said Khan Horne (pictured above), NAB executive for regional and agribusiness.
“Our customer insights show strong business sentiment in both regional and rural locations, reflecting optimism for the future and confidence to tackle emerging challenges.”
Horne said the call of the country has cemented itself in Australia, with internal migration to the regions from capital cities still at 30% above pre-pandemic rates.
The regions also saw a massive growth in demand for infrastructure, as reflected in the uptick in the demand for credit and corresponding investment into infrastructure projects. The community services and property services segments posted a 24.8% and 10.2% rise in credit demand, respectively.
The NAB Regional and Agribusiness Horizons report also revealed that demand for credit increased 6.7% in 2022, with Australian regional businesses focused on long-term growth and short-term opportunities and were investing at a higher rate than the rest of the economy.
Agricultural lending rose 14.6% for the 12 months from March 2022 to March, compared to 10.7% for all businesses. For equipment finance, demand jumped 47% on pre-pandemic levels, reflecting strong customer appetite for new and used equipment.
Deposit volumes for regional businesses grew by 3% and agricultural deposit volumes grew by 8.1%; while farm management deposits rose 35%.
The same research also showed the availability of labour remained the top concern for regional employers, followed closely by wage costs.
“Despite the growth in regional populations, the skilled and unskilled farm labour markets remain tight,” Horne said.
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