Good growth expected for H1 2013
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Australian economic growth should maintain its momentum in the first half of 2013, a private survey shows.
The Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months in the future, was 4.3 per cent, above its long-term trend of 2.8 per cent.
Westpac senior economist Matthew Hassan said the index had now been running at above trend pace for four months in a row.
"The Leading Index suggests the Australian economy is carrying reasonable momentum heading into the first half of 2013," Mr Hassan said.
"That said, at 4.3 per cent, the pace of growth is moderately above trend rather than strong."
Mr Hassan said it was unclear if this pace of growth would be maintained in the second half of the year when Australia's mining investment cycle will start to turn.
The Reserve Bank of Australia (RBA) said, in its most recent Statement of Monetary Policy, the mining investment boom will peak by the end of the year.
"This will see what has been a substantial support to growth increasingly become a drag," Mr Hassan said.
"In a sense, the economy needs to have strong momentum, particularly across non-mining sectors, to absorb the turnaround in the mining sector."
Westpac expects the RBA to cut the cash rate to 2.75 per cent at its March 5 board meeting.
The central bank kept the rate at three per cent at its first meeting of the year, in February. Its most recent reduction was in December.
The annualised growth rate of the Coincident Index, which measures current economic activity, was 2.3 per cent, slightly below its long-term trend of three per cent.