GDP growth to be sluggish in 2016

Australia's financial system is possibly to grow extra sluggishly in 2016, new figures show.

The Westpac/Melbourne Institute main Index fell 0.15 factors to ninety seven.07 in February, from ninety seven.22 in January.

it is the fourth decline in 5 months of the index, which indicates the in all likelihood tempo of economic interest 3 to 9 months into the future.

Westpac economist Matthew Hassan says the autumn is a clear signal the economy will develop more sluggishly this yr than the robust three.zero in step with cent gross home product increase as an entire in 2015, with increase strolling at a three.5 per cent annual pace over the yr's second 1/2.

"That strong finish turned into foreshadowed by means of the leading Index which had run 0.10 per cent above fashion on common over the primary 1/2 of 2015," he said.

"The index has due to the fact that weakened considerably, with the six-month-to-month annualised growth rate averaging zero.67 according to cent beneath fashion when you consider that mid-2015.

"that could be a clean signal that increase is about to go back to the more gradual 2.zero-2.five per cent GDP growth fees visible in 2014."

Mr Hassan said the same worldwide factors that weighed at the index in January - falling commodity expenses and susceptible US business production - had also pushed the index decrease in February.

regionally, the falling ASX, a 7.5 according to cent decline in residing approvals in January and a barely poorer outlook for the labour marketplace additionally helped push the index lower.

Mr Hassan stated that notwithstanding the weakened economic outlook, he expected hobby quotes to stay on maintain in 2016.

"even though the (Reserve) financial institution is simply looking traits abroad carefully for capacity threats, the stable growth figures for 2015 and endured resilience of the labour market are fundamental positives locally," he stated.

"recent power inside the Australian dollar has been related to a greater fine outlook for commodity costs and as such would no longer be grounds for a policy adjustment."