Economic growth will continue to slow in the medium term but will not fall into recession, a Westpac-Melbourne Institute Leading Index has revealed.
The index, which indicates the likely pace of economic activity three to nine months into the future, was 2.5 per cent in August – compared to its long-term trend of four per cent.
Westpac chief economist Bill Evans said yesterday that the government’s initiatives announced in recent days would work to combat the unprecedented situation of weak demand and constrained credit, and thereby improve prospects for growth.
As such Westpac revised its GDP growth forecasts from 2.5 to 2.8 per cent for 2008, and up two per cent to 2.2 per cent for 2009.
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