Australia’s progress stays beneath development into 2024 – Westpac

The most recent Westpac-Melbourne Institute Main Index has signalled continued below-trend progress for the Australian financial system, with a slight enchancment within the close to time period overshadowed by broader weaknesses.

Westpac’s financial forecast

Based on the Westpac-Melbourne Institute, the Australian financial system is anticipated to endure subdued progress within the first half of 2024, regardless of a minor raise from the latter half of 2023.

The six-month annualised progress price within the main index, a predictor of financial exercise relative to development three to 9 months sooner or later, dipped to -0.25% in January, from -0.01% the earlier month, underscoring the challenges dealing with the financial system.

A stagnant financial progress trajectory

Regardless of a short uptick in late 2023, the financial system stays on a trajectory of sub-trend progress.

“Westpac expects Australia’s financial progress to trace a 1.3% annualised tempo within the first half of this yr, lifting from a weak 0.8% tempo over the second half of 2023 however nonetheless properly beneath development, which is round 2.5percentyr,” stated Matthew Hassan (pictured above), senior economist at Westpac, in a media launch.

“The most recent main index reads are according to this sluggish near-term progress profile.”

Momentum is anticipated to remain subdued within the close to time period, though there was a noticeable enchancment in comparison with final yr. All through the primary half of 2023, the main index’s progress price fluctuated between –0.75 and –1%, considerably decrease than the –0.25% tempo noticed in January.

The small print trace that the noticed enchancment could solely signify a tentative stabilisation relatively than the beginning of a brand new cyclical upswing. The most recent information exhibits combined outcomes throughout the eight parts, with equal numbers bettering and deteriorating.

Seasonal components and different noise may make among the latest declines in hours labored and dwelling approvals non permanent. Equally, among the optimistic developments, such because the rally in commodity costs, might not be sustainable, the Westpac report stated.

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