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ANZ chairman John Morschel says that he believes that Australia’s economic recovery is set to be as volatile as anything in the United States and Europe.

Mr. Morschel made his comments during the lenders annual general meeting and added that issues stemming from global financial crisis would continue to resonate throughout the global economy.

The ANZ chairman said that whilse he expects the pace of Australian economic recovery to be faster than it peers, it was likely that the country will face a similar kind of volatility experienced by the US and Europe as they work through their issues.

“This includes potential volatility in our funding costs. The immediate dangers from the global financial crisis have not passed. Although the euro zone seems set to survive, confidence in the EU as a political union continues to erode, and…European banks will need to continue to shore up their balance sheets.” Mr. Morschel said at the AGM.

According to ANZ, Asia ex Japan is expected to expand by about 8 per cent during 2011, which is in stark contrast to the nearly anemic less than 2.5 per cent expected in Europe and the US.

“Australia is expected to continue to perform well, and in New Zealand the recovery is gathering momentum. But with the global economic growth likely to be soft over the medium term, the environment will remain challenging to navigate.” Mr. Morschel said.

The chairman once again said that funding costs have risen post financial crisis and that these costs made it difficult for ANZ to balance its commercial obligations with the expectations of its customers and the community.

Against that backdrop Mr. Morschel warned that populist driven policy on banking competition would be harmful to the Australian economy.

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