Australia’s progress stays under pattern into 2024 – Westpac

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

Westpac’s financial forecast

In keeping with the Westpac-Melbourne Institute, the Australian economic system is anticipated to endure subdued progress within the first half of 2024, regardless of a minor elevate from the latter half of 2023.

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

A stagnant financial progress trajectory

Regardless of a short uptick in late 2023, the economic 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 12 months, lifting from a weak 0.8% tempo over the second half of 2023 however nonetheless nicely under pattern, which is round 2.5percentyr,” stated Matthew Hassan (pictured above), senior economist at Westpac, in a media launch.

“The newest main index reads are in step with 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 12 months. All through the primary half of 2023, the main index’s progress charge fluctuated between –0.75 and –1%, considerably decrease than the –0.25% tempo noticed in January.

The small print trace that the noticed enchancment might solely signify a tentative stabilisation moderately than the beginning of a brand new cyclical upswing. The newest knowledge exhibits combined outcomes throughout the eight elements, with equal numbers enhancing and deteriorating.

Seasonal elements and different noise might make a few of the current declines in hours labored and dwelling approvals non permanent. Equally, a few of the constructive developments, such because the rally in commodity costs, might not be sustainable, the Westpac report stated.

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