by Duncan Murray
SYDNEY, Aug. 21 (Xinhua) -- While companies may feel an initial pinch from yet another leadership dispute in Australia's capital, experts believe that ultimately the economy carries on despite politics.
With Prime Minister Malcolm Turnbull facing and defeating a challenge to his leadership just before Tuesday's share market penning, Aussie stocks came under heavy pressure.
"We have some pretty clear evidence that it was the action in Canberra that really influenced the market today," CMC Markets' chief market analyst Michael McCarthy told Xinhua.
Despite positive futures projections, based on global markets and commodity prices, the Australian bourse dropped over half a percent in the hours that followed the leadership challenge.
"One of the key factors here is uncertainty, and while there is political uncertainty it's unlikely to be a positive for markets."
Even though markets fluctuated in the wake of the political turmoil, those focused on the broader economy are not as concerned.
Paul Dales, chief Australia and New Zealand economist from Capital Economics, does not believe that changes of leadership, or even the uncertainty of an ongoing leadership dispute, will have a significant effect on the nation's businesses.
"It's probably not as big of a deal as you might think, by and large political instability and changes tend not affect the economy that much," Dales said.
"They probably do at the margin, maybe business confidence is a little bit lower than otherwise, but it won't make a huge difference."
Policy, or potential shift off policy on the other hand, may be what has a greater impact on the economy, with a number of issues surrounding the current leadership turmoil also having potential effects for a number of the nation's key sectors, experts said.
"They of course are the financial sector with recommendations due from the royal commission next year and potential legislative action there," McCarthy said. "And the energy market and in particular the energy retailers who were likely beneficiaries of a National Energy Guarantee and now they're thrown into flux by the leadership turmoil."
While Dales agrees that if Tuesday's events increase the chance of a change of the government, there may be broader implications. The economist maintains that there is likely little that even the top leaders do, that can really make the money move.
"What our research has led us to believe is that the economy is more powerful than the politicians," he said.
"The economy just carries on regardless of what the politicians do -- they can tinker at the edges but they can't really make a huge difference."
