Australiaā€™s per capita recession tipped to stick around

Australia is likely to remain in a per capita recession for the next year based on a lacklustre set of forward-looking indicators.

The Westpac-Melbourne Institute leading index, which collates eight economic indicators that predict the direction of the Australian economy, remains stuck in negative territory.

The six-month annualised growth rate of the index lifted slightly from negative 0.56 per cent in July to negative 0.50 per cent in August.

Despite the slight improvement, a negative growth rate points to an economy growing at below-trend growth in the coming months.

Westpac chief economist Bill Evans said weak economic performance can be expected for the next year or so.

The bankā€™s economists are anticipating growth to come in at less than one per cent for the year to June 2024.

ā€œThere may be some upside risks to that downbeat number now that population growth is likely to exceed two per cent in 2023,ā€ Mr Evans said.

Australiaā€™s population has been expanding rapidly as borders reopened after migration stalled during the pandemic.

Economic growth is likely to keep trailing population growth, Mr Evans added, likely keeping Australia in a GDP per capita recession for another 12 months.

The economy has already recorded two months of declines in per capita growth.

The leading index has been improving a little over the course of the year, however, led by steadying consumer perspectives on how the economy and the labour market is faring.

ā€œOverall, the mix is seeing a reduced drag from financial conditions and domestic conditions but continued weakness in international conditions, especially relating to commodity prices,ā€ Mr Evans said.


Poppy Johnston
(Australian Associated Press)


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