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AAP

2012-12-19

Ed: NOT TO BE USED UNTIL 1030 AEDT, WEDNESDAY DECEMBER 19, 2012.

By Caroline Smith

SYDNEY, Dec 19 AAP - Australia's economic growth is likely to slow in the near future, an industry study predicts.

The Westpac-Melbourne Institute leading index of economic activity has reported a fall in the annualised growth rate to 2.9 per cent in October, from 4.1 per cent in September.

The figure is fairly close to the index' long-term trend of 2.7 per cent.

The index tracks growth in the Australian economy three to nine months into the future.

Westpac chief economist Bill Evans said the data was disappointing, compared to the previous reading.

"Last month, we were encouraged that the growth rate in the index was lifting and pointing to a stronger growth pace than we had factored into our forecasts," he said.

"Unfortunately, this lift in the growth pace has now faded and is more in line with our views around the likely growth momentum in the Australian economy in 2013."

Mr Evans said Australia's economy would slow in 2013, with Westpac predicting a growth rate of 2.75 per cent, compared to 3.0 per cent in 2012.

"While we are expecting a modest uplift in the contribution to growth from the consumer, housing and non-mining investment in response to the interest rate cuts we have seen through 2012 and the further cut we envisage in early 2013, growth is still likely to falter as the contribution to growth from the mining boom fades in 2013," he said.

The study's co-incident index - which tracks current growth - reported an annualised growth rate of 2.5 per cent in October, below its long-term trend of 3.0 per cent.