Economy’s momentum unlikely to pick up

Global Economy on the Mechanism of Metal Gears.

Sydney
(Australian Associated Press)

The Australian economy is unlikely to gain much momentum over the coming months, despite a weaker dollar and low interest rates.

The latest Westpac/Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, was above trend in late 2014, but has fallen back since.

The index nudged higher last month, from minus 0.02 per cent in May to 0.06 per cent in June, indicating a forecasted growth rate just above trend.

Westpac chief economist Bill Evans said any improvement in economic activity over the period ahead would be moderate.

“As we noted last month the change in the growth rate of the index is indicating that the economy appears to be losing momentum through the middle of 2015,” Mr Evans said.

He said it was likely officials could start to review economic growth forecasts “in spite of the expected boost to demand from the falling Australian dollar and record low interest rates”.

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