Australia (Commonwealth Union)_ Hey there! Let’s take a closer look at the economic outlook for Australia. According to the Westpac-Melbourne Institute Leading Index, which gives us a glimpse into Australia’s economic activity over the next few months, there’s a slight positive shift. From July to August 2023, we saw an improvement from minus 0.56 percent to minus 0.50 percent.
However, it’s important to note that things still look a bit challenging. Westpac’s chief economist, Bill Evans, pointed out, “We have been in a period of economic weakness for a little over a year now. This suggests that the economy is growing at a slower pace than what we’d ideally want”.
Starting from August of the previous year, a series of negative figures accurately predicted the downturn experienced in 2023. The growth rate for the first two quarters of this year, from March to June, stood at an annualized 1.6 percent. This is noticeably lower than the usual trend of around 3 percent per year.
Looking ahead, Westpac anticipates that this modest performance will extend into the following year. Economic growth is projected to be less than 1 percent for the year leading up to June 2024. There’s a possibility of some positive surprises though, especially with an expected population growth of over 2 percent in 2023.
While a growing population can have a favorable impact on the economy, Evans has advised that economic growth might still lag behind. This trend was observed in both the March and June quarters this year, with GDP per capita contracting by 0.3 percent.
Even though there was a slight improvement in the leading index since the beginning of the year, going from minus 0.73 percent in February to the current minus 0.50 percent, it’s worth noting that this uptick of 0.24 percentage points doesn’t completely ease concerns about the recovery of the Australian economy.
In essence, while there’s a hint of progress, there’s still work to be done. Let’s keep an eye out for potential positive shifts in the coming months!
