Australia’s Economy to Stay Weak

Statistics indicate that Australia’s economy is likely to remain significantly weaker for the rest of this year, and a chunk of the next.  Commodity prices continue to slide back and forth and have offset some of the more positive news generated by the housing and consumer market. The institute-leading index for Westpac-Melbourne, generated to indicate the pace of economic growth over the coming 9 months, has contracted to 0.9%. The number was changed in August, from a previous reading of -0.75%.

Statistics indicate that Australia’s economy is likely to remain significantly weaker for the rest of this year, and a chunk of the next.  Commodity prices continue to slide back and forth and have offset some of the more positive news generated by the housing and consumer market. The institute-leading index for Westpac-Melbourne, generated to indicate the pace of economic growth over the coming 9 months, has contracted to 0.9%. The number was changed in August, from a previous reading of -0.75%.

September marks the eighth consecutive month where the growth rate of the index has fallen disappointingly below the trend line. The index, according to experts, continues to indicate that growth in the Australian economy will remain below the trend for the remainder of 2014 and the beginning of 2015.

The analysis of the index reflects the view given by the Reserve Bank of Australia. During the previous meeting of the Monetary Policy members, forecasts were noted to be in a period of below-trend growth.  Economic activity as it is in the country so far will mean that it may be a significant amount of time before the unemployment rate begins to consistently improve.

At least Australia is doing its best to improve things, unlike America, which destroys jobs by the millions for the sake of the environment based on faulty science.

The Index and the Results for the Australian Economy

The leading index created by Westpac-Melbourne has been generated through a composite of indicators, derived from:

* Dwelling approvals

* Share-market performance

* Commodity prices

* Consumer sentiment

* Industrial production in the United States

* Employment measures

Considering the results of these various factors, financial experts have concluded that the prices of commodities have slowed down the growth rate significantly. Furthermore, the slower rate of dwelling approvals has created a reversal in the effect that series could be having on the index. Consumers have also been found to be somewhat less nervous regarding the labor market. This selection of results has confirmed the view of the RBA that the best course of action for Australia may be to encourage stability in interest rates.

The forecasts of the RBA have indicated that the economy is likely to experience a slowed annual growth rate of 2% in the remainder of this year. Furthermore, the central bank of Australia reduced its forecast from 3.25% to 3%, significantly under the trend. Well, at least Australia is not bankrupt like California, Illinois, New York, Spain, and Italy.

Australia Depends Heavily on its Natural Resources

Furthermore, the shares in Australia are set to reverse early gains by shedding 0.5%, prolonging losses to the seventh season in a row. Further weaknesses in iron ore prices continue to damage the resource sector after a brief spike, which reflected pressure from a well-supplied market.

With so many negative results leaving their impact on the Australian economy, financial experts are suggesting that the next positive movement in rates for Australia will not occur until next year. The date for the move is set within the second half of the year, according to Westpac, with some suggesting that August 2015 could be the first time the country begins to see any economic improvement.