Australia's economic growth slows for third month in June

13:48, August 18, 2010      

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Australia's economic growth rate slowed for the third straight month in June, sparking fears the nation is facing an imminent economic slowdown, a survey showed on Wednesday.

The Westpac/Melbourne Institute leading index of economic activity was virtually flat in June after it fell 0.1 points in the month.

On an annualized basis, the growth rate decelerated to 6 percent, down from 7.4 percent in May.

Westpac chief economist Bill Evans said while the nation's growth rate has slowed, it was still high.

"Our current forecast is that growth through 2010 will be 3.5 percent with an even pace through the year despite some sizeable swings in different sectors," Evans told The Australia on Wednesday.

"This is slightly above trend which we assess as?three percent. "

Contrary to the leading index, the survey's coincident index continued to rise.

In June, it was at 3.8 percent, above the long term trend of 3 percent.

Dr Evans described the differences between the headline figure and the coincident index as unusual.

"The growth rate in the Coincident Index is now clearly above trend," Dr Evans said.

"This is the second consecutive month that the growth rate is above trend pointing to a very solid growth performance for the economy in the June quarter."

The weaker outlook for growth over the nine months from June was triggered in part by falling building approvals nationwide and a slump in shares through the month.

Looking ahead, said Dr Evans, a key concern may come from abroad: "An important question is whether the U.S. will dip back into negative territory and whether the world's largest economy will pull the rest of the world with it."



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