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 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 carry from the latter half of 2023.

The six-month annualised progress price 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 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 effectively 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 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 fairly than the beginning of a brand new cyclical upswing. The newest information exhibits combined outcomes throughout the eight parts, with equal numbers enhancing and deteriorating.

Seasonal components and different noise might make among the current declines in hours labored and dwelling approvals short-term. Equally, among the optimistic developments, such because the rally in commodity costs, is probably not sustainable, the Westpac report stated.

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