Australia is likely to remain in a per capita recession for the next year based on a lacklustre set of forward-looking indicators.
The Westpac-Melbourne Institute leading index, which collates eight economic indicators that predict the direction of the Australian economy, remains stuck in negative territory.
The six-month annualised growth rate of the index lifted slightly from negative 0.56 per cent in July to negative 0.50 per cent in August.
Despite the slight improvement, a negative growth rate points to an economy growing at below-trend growth in the coming months.
Westpac chief economist Bill Evans said weak economic performance can be expected for the next year or so.
The bank’s economists are anticipating growth to come in at less than one per cent for the year to June 2024.
“There may be some upside risks to that downbeat number now that population growth is likely to exceed two per cent in 2023,” Mr Evans said.
Australia’s population has been expanding rapidly as borders reopened after migration stalled during the pandemic.
Economic growth is likely to keep trailing population growth, Mr Evans added, likely keeping Australia in a GDP per capita recession for another 12 months.
The economy has already recorded two months of declines in per capita growth.
The leading index has been improving a little over the course of the year, however, led by steadying consumer perspectives on how the economy and the labour market is faring.
“Overall, the mix is seeing a reduced drag from financial conditions and domestic conditions but continued weakness in international conditions, especially relating to commodity prices,” Mr Evans said.
Poppy Johnston
(Australian Associated Press)
