Economic rebound comes with ‘health warning’: Ahmed Fahour

Latitude chief executive Ahmed Fahour says the expected pre-Christmas economic rebound depends on vaccination rates continuing to climb, warning the recovery will be pushed into next year if too many people delay getting jabbed.

Mr Fahour, who runs Australia’s second largest personal lender, said in an interview he was confident pent-up consumer demand would drive a powerful recovery as NSW and Victoria ease lockdowns in the months ahead.

Latitude Group chief executive Ahmed Fahour Credit: Arsineh Houspian

After Latitude last week announced plans to raise an extra $150 million in funding to pursue expansion opportunities here and overseas, Mr Fahour predicted there would be “huge” economic growth in 2022.

“I think Australians… are going to be surprised at what happens when we get out of lockdown on the other end, and the snap-back that I anticipate that we’re going to find domestically,” Mr Fahour said.

However, he said his upbeat outlook came with a “health warning”: the recovery was dependent on vaccination targets being met and re-opening occurring in a timely way.

“It looks like we’re going to do that, we’re going to bounce back before Christmas. But I dread the thought of somehow anybody taking for granted the need to get vaccinated,” said Mr Fahour, who said he had received two doses of AstraZeneca.

“If we delay that, we delay the opening, then instead of it being a very exciting Christmas and early 2022, this might push the recovery later into the new year, but I don’t see that at the moment.”

ASX-listed Latitude, which provides personal finance through retailers such as Harvey Norman, last week sought to diversify its funding by launching an offer to raise $150 million in capital notes, a type of unsecured fixed-income security. As well pursuing domestic growth, the company is also in the early stages of a push into Asia, and also eyeing loan portfolios that could be acquired.

Latitude’s lending is being held back by the current lockdowns in NSW and Victoria, which are thought to have triggered a sharp economy-wide contraction for the quarter. A key question for investors is how quickly growth rebounds once restrictions are eased.

Mr Fahour praised the NSW government’s recent re-opening plan as “really positive” and said he hoped Victoria would set a similar target for when 70 per cent of its eligible population was vaccinated.

Despite the struggles facing many businesses, he said state government support and a desire by consumers to get out would allow businesses to emerge from hibernation. However, if lockdowns were in place for too long it would make the recovery harder.

“It’s a bit like your old second-hand car that’s in your garage. If you haven’t turned it on for a long time, it takes a bit of effort, and it needs to be pump primed,” he said.

Capital Economics forecasts NSW could have “Freedom Day” on October 13, when it estimates 70 cent vaccination of its eligible population will be vaccinated, while it forecast Victoria would hit this level on October 26.

The firm’s Australian economist Ben Udy cautioned that although the easing of restrictions would be a relief to business, re-opening would not start “with a bang” due to ongoing social distancing rules and restrictions on the unvaccinated.

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