Australian economy continues to slow in October: latest data

13:24, December 22, 2010      

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Latest data suggested on Wednesday that Australian economy continued to slow in October to a more moderate pace, but strong growth is tipped in early months of 2011.

The Westpac-Melbourne Institute's leading index released on Wednesday reported that the economy grew at an annualized rate of 4.1 percent in October, the sixth consecutive month of slowing growth. The index grew 4.5 percent in September.

The index, which indicates the likely pace of economic activity three to nine months into the future, has abruptly slowed from a peak of 9.7 percent in March.

"The rapid deceleration ... is somewhat disconcerting," Westpac senior economist Matthew Hassan said in a statement on Wednesday. "But so far it implies a cooling off from unsustainably strong growth rates to a more moderate pace of expansion rather than outright weakness."

Its coincident index, a broad measure of current economic activity, also points to a patchier economic performance with growth momentum moving below trend for the first time since December 2009. This index showed an annualized growth rate of 3.1 percent in October, compared with growth of 3.8 percent in September.

Hassan said interest rate decisions by the Reserve Bank of Australia this year have been successful in reining in the unsustainably strong burst of growth earlier in the year.

Westpac believes the Reserve Bank will leave the cash rate unchanged at 4.75 percent when its board next meets on Feb. 1, as it continues to assess the impact of its November increase.

Westpac expects average growth in 2010 of 3.5 percent, and 4 percent growth next year before slowing in 2012.

Source: Xinhua
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