NAB’s Executive for Regional and Agribusiness, Khan Horne, discusses the outlook for the year ahead for regional and agricultural businesses.

As 2024 begins, helping our customers build resilience into their businesses will continue to be a focus for NAB Regional and Agribusiness.

NAB’s economic outlook for the year ahead includes a revision to our forecast for interest rates.

We now expect the current cash rate of 4.35pc to be the peak, with the RBA to leave the rate on hold until November this year before gradually cutting rates to 3.1pc by the end of 2025.

Potentially being at the top of the interest rate rising cycle gives business owners a level of confidence. This means they’re more likely to take on new staff, look for opportunities to grow if they can and are thinking about the medium-term outlook.

The Australian Dollar (AUD) is up from its low in late October when it was in the high US62c range and NAB continues to see the AUD tracking higher over 2024 and ending the year around US73c.

Beyond the timing and scale of the eventual easing of monetary policy, geopolitical factors could continue to influence economic activity including ongoing conflict in Russia-Ukraine and the Middle East, tensions between the US and China, and uncertainty around the outcome of the 2024 US Presidential Election.

Many agricultural regions transitioned from very challenging to sound conditions within the span of a single season, resulting in some exceptional years for the sector – in the order of $93 billion in gross value in 2021-22.

While we expect forecast declines in crop production and reduced livestock prices to impact growth, it is worth noting farm incomes are predicted to remain higher than during the recent drought.

Our customers are telling us that sourcing staff in regional and rural areas is a challenge that many of them are grappling with, both as they expand and focus on profit generation through ongoing expense pressures.

We also know one in five small and medium-sized business owners strongly intend to improve the sustainability of their business in the next two years but understanding where to start remains one of the biggest hurdles.

We’re firmly committed to supporting our customers on their transition journey with products including business finance for green equipment and our NAB Green Finance for Agribusiness.

New NAB data shows there is increasing demand for green equipment like solar panels and eligible tractors and trailers in regional and agricultural businesses. And in the 12 months to November 2023, we boosted the number of commercial electric vehicles (EVs) we’ve financed by a whopping 316% – well above national
growth of 179%.

As the biggest business bank in the country, we have multi-decade relationships with many of our customers primarily because we stick by them through the good times and the not so good times.

At National Australia Bank (NAB) Group, relationships are our strength. We exist to serve customers well and help communities prosper, with more than 35,000 colleagues at the
bank, serving more than 10 million customers who rely on us to deliver secure, easy and reliable banking services. Approximately 96pc of the Group’s workforce are in Australia and
New Zealand, while others work in London, New York, Paris and parts of Asia. NAB is proud to be Australia’s largest business bank. We stand by our customers, and they have our
ongoing support.