Economic indicator points to slowdown in Australia

Economic indicator points to slowdown in Australia

A leading indicator of the Australian economy suggests that the country should expect a slowdown in growth this year. Westpac and Melbourne Institute disclosed that the annualized growth rate of their leading index of activity eased from 2.3% in December 2004 to 2.2% in January. The indicator is well off its long-term trend of 3.5%. The worsening in growth prospects can prevent Australian Reserve Bank's rate increase in April or May and record slump in consumer sentiment. Australian economy, which is expected to cool off in the second half of 2005, may prompt central bank to keep policy on hold, rather than raising rates again.