An Australia and New Zealand (ANZ) Banking Group Ltd executive has declared that the worst is pretty much over for the Australian economy as it has survived the downturn almost unscathed, though warning at the same time that the country must stay cautious on the worsening debt crisis in Europe which could restrict local banks' access to credit facilities.

ANZ chief executive Mike Smith told AAP that since mortgage demand has hardly fallen amidst the jumps in interest rates and with the labour sector and consumer lending heading to recovery, it is safe to assume that "we're almost through the major part of the downturn."

He conceded though that ANZ's corporate lending is still weak but loans are actually waiting in line for activation or approval, which he described as loans for "for longer-term projects, sort of three-year building projects or new production lines."

Mr Smith pointed to ANZ's growth strategy channelled on Asia, currently showing signs of leading the world in economic growth and where Australia is well-positioned to gain benefit as the continent gathers further traction for the future.

He is worried though that the US and Europe are becoming the problematic concerns of the global economy, with the sovereign debt issues in Europe blurring further its situation and adding uncertainties that can only get worse in the days to come.

Earlier this week, US-based Standard & Poor's has downgraded Greece's sovereign debt to junk status, which shuttered the nation's access to private capital while Portugal faces the spectre of its own downgrade, and further underscoring the prospect of a wide-ranging Eurozone crisis.

Mr Smith said that Europe's sovereign debt issues may not dent Australia's economy as much as the global financial crisis did, but it has a direct impact on investor confidence and bank's access to credit markets, adding that "In terms of the funding that the Australian banks have, in terms of their wholesale funding, obviously credit spreads are going to be more volatile."