Credit Crisis May Last 2 Years - Sydney Morning Herald 26-6-08
Commonwealth Bank chief executive Ralph Norris said there had been some improvement to the global economic outlook.
However, Mr Norris said the global credit crunch still had at least 12 months to two years to play out.
Mr Norris said market conditions had improved particularly after the US Federal Reserve helped rescue investment bank Bear Stearns in March.
"However, it's a situation that is obviously very fragile,'' Mr Norris told a credit card conference in Sydney.
"From my perspective, I would suspect that it's going to take at least another 12 months, possibly two years ... for this particular crisis to work its way through.
"When people say that there's potentially up to another $US700 billion worth of write-offs in the sub-prime CDO marketplace that's over and above the $US300 billion that's already been written off, that $US700 billion figure is a big number.''
Mr Norris said that only time would tell what kind of impact a US economic slowdown would have on wider global economic activity.
The outlook for Australia was more positive, but there was no doubt that underlying economic activity was slowing, he said.
"The real unknown is exactly what the RBA's tightening will do to this outlook, along with increases in oil and food prices and international wholesale funding costs.''
A slowing local economy had reduced discretionary spending, pushing annual growth in credit card balances down to 10%, its lowest rate of annualised growth since 1994,'' Mr Norris said.
