EOFY Reflection: Opportunities Ahead
Found in: Blog
Found in: Blog
A very strong year for the Western Australian economy has meant that the EOFY has rolled around quickly for many of us. Grondal Bruining’s corporate practice (and the firm more broadly) certainly experienced continued strong workflow off the back of that economic strength. While 12 months ago I put the confidence levels down to a post COVID rebound, I think in the past 12 months’ economic performance has been driven by the strength in prices across all commodities (which drives confidence and therefore investment, expansion, etc.), and to a lesser extent the associated growth and prominence of renewables (which WA is particularly well placed to take advantage of). Additionally, having some clear air after a number of challenging years has led a number of enterprises to reassess how they are placed and therefore look to undertake restructures, capital investment or a refinancing so they are best positioned for the future.
By way of example, Grondal Bruining’s corporate team saw the following mix of work over the past 12 months:
The biggest takeaway for me from the past 12 months is the increase in renewables related transactions, which I expect is just the beginning of a sustained run. Given the momentum of the energy transition, I’m certainly optimistic about continued and increasing opportunities in this space for transactional work going forward.
Nevertheless, the coming year is far more uncertain with inflation in Australia and other key international economies breaking out, mainly due to supply challenges, as well as the skills shortage and the concern about the Ukraine conflict and its potential consequences. The break out in inflation around the world has been exacerbated by the fact that those with their hands on the economic levers have been to slow to recognise the “permanence” of the inflationary factors. They are now playing catch-up by way of substantial interest rate rises with a view to tightening demand to match the supply side and therefore curb inflation. It seems to be generally accepted that in Australia this will require the recent interest rate rises in Australia to be matched or exceeded in the coming 6-12 months – which the RBA has confirmed with another 50 basis points increase!
What this will mean for the Australian economy is unknown. But there seems to be a general view that we are more likely to have a comparatively “soft” landing than that which other countries might experience. As for what this means for the WA economy specifically, frankly I don’t know. But I think undoubtedly things will not be as strong as they have been for the past 18 months. If tightened monetary policy constrains demand as intended, then it can be expected that commodity prices will fall. But if the Australian economy remains comparatively strong by world standards, and commodities prices can nevertheless hold up relatively well, then WA may come through this phase without too much pain.
Of course changing circumstances also create opportunities, including that:
Hopefully for all of us the unique factors that drive the WA economy mean that while things might slow down for, we will still have more than enough to do (if we can just find some people to help us do it!!). And if it does quieten down, as we can now travel again it presents an opportunity to catch up with family and friends interstate, or maybe even take a well earned overseas break – I’m always the optimist….
Level 5 | 22 Delhi Street | West Perth | WA 6005
Phone: +61 8 6500 4375
Mobile: +61 414 858 584
Grondal Bruining is a commercial law and litigation firm located in Western Australia. As a team, we are fully committed to providing the highest quality legal services, with a focus on energy and natural resources, commercial and industrial sectors.
Grondal Bruining clients and referrers benefit from direct Principal access and an experienced and flexible legal team with extensive local knowledge and business networks. We are sought for our personal, proactive and professional approach to delivering the highest quality commercial and corporate outcomes and have been widely recognised as leaders in our fields by external ratings directories.
Limited Liability by a scheme approved under Professional Standards Legislation.