Robust or vulnerable? Experts are split on Australia's economic outlook

The Bank of Queensland said it's "quite bullish" connected Australia's "very robust economy" — but not everyone agrees.

"We've got a precise robust economy, which I deliberation erstwhile you look astatine the planetary challenges, the likelihood of america really coming retired of this successful bully signifier is rather high," George Frazis, CEO of Bank of Queensland, told CNBC connected Wednesday.

"The [Reserve Bank of Australia] has moved reasonably rapidly to woody with ostentation … that's wherefore I deliberation there's a bully accidental that we'll person a brushed landing successful Australia," Frazis said.

The RBA past week raised involvement rates by 25 ground points to 2.6%, and cited the rising outgo of living.

"As is the lawsuit successful astir countries, ostentation successful Australia is excessively high," the Australian cardinal slope said. "Global factors explicate overmuch of this precocious inflation, but beardown home request comparative to the quality of the system to conscionable that request is besides playing a role."

Frazis cited "very precocious household savings" and "very debased unemployment" arsenic driving forces for the robust economy, contempt unit connected lodging prices.

"And this is connected the backdrop wherever lodging prices person really accrued by 39% implicit the past 2 years," clarifying aboriginal that the fig referred to terms increases successful Australia betwixt June 2019 to April this year.

Figures from Corelogic, 1 of Australia's starring spot information providers, bespeak that nationalist Australian lodging values accrued by 28.6% successful the past 2 years. Some superior cities experienced terms rises of 39% and more.

The linchpin of whether the lodging marketplace gets disrupted oregon not, according to Frazis, lies with the unemployment numbers, which helium said were astatine an "all-time low."

Australia's unemployment rate stood astatine 3.5% successful August, and household savings ratio fell to 8.7% successful the March to June quarter.

"Our presumption is that [unemployment] is apt to proceed and that is the cardinal operator of lodging getting disrupted oregon not."

The bank's CEO besides expressed assurance that Australia is "well buttressed" against immoderate benignant of cataclysmic lawsuit wrong the lodging market, citing homeowners were redeeming up and being up connected repayments.

However, helium maintained that disruption successful the Australian lodging marketplace is "unlikely" to materialize.

However, not everyone carries the aforesaid optimism arsenic Frazis.

According to a fiscal stableness reappraisal connected RBA, Australia's higher involvement rates volition summation borrowers' indebtedness repayments.

The study pointed retired that income maturation has not kept up with ostentation successful Australia and households are left with little capableness to work their debt. Additionally, a tiny stock of borrowers with precocious indebtedness and debased savings are "vulnerable" to outgo difficulties.

"Debt-servicing challenges volition go much wide if economical conditions, peculiarly the level of unemployment, crook retired to beryllium worse than expected and lodging prices autumn sharply," the study continued. 

In addition, Assistant Treasurer Stephen Jones cautioned that Australia's system is not "hermetically sealed" from the forecasted downturn of the planetary economy, Sky news reported. 

Jones added that the country's large trading partners are successful a "precarious" and deteriorating" situation, which is going to interaction Australia.

He besides noted that arsenic ostentation rises, the system slows astir the world. This volition successful crook person an interaction connected Australia's maturation forecast.

"We conscionable cannot beryllium complacent astir those numbers," helium said.

The International Monetary Policy Fund precocious announced that one-third of the satellite is headed for a recession, which could see economical superpowers similar China and the U.S.

One economist suggested a humble outlook for Australia's economy, and predicted the country's maturation volition dilatory to astir 2%, arsenic opposed to falling into recession.

High household indebtedness successful Australia could could wounded user spending, according to Shane Oliver, main economist astatine AMP Capital. However, ostentation and little wage maturation besides meant that this hazard is lower, helium added.

"While the lodging assemblage is highly susceptible to higher involvement rates, existent lodging operation should stay coagulated for a portion acknowledgment to a large pipeline of approved but yet to beryllium completed location gathering projects," said Oliver.

The economist added that Australia's state prices person not changeable up anyplace adjacent arsenic overmuch arsenic that successful Europe, and the falling Australian dollar volition supply a buffer against planetary weakness.

— CNBC's Tan Su Lin contributed to this report.