Economy still contracting but improving: Westpac

Australia’s economic activity is still contracting, but at a much lower rate than it was mere months ago, according to Westpac.

Westpac chief economist Bill Evans said the growth rate of the leading index – the likely pace of economic activity three to nine months into the future – had improved from -7 per cent in May to -1.8 per cent in July.

“The weak reads in the middle of 2009 are broadly consistent with our view that growth in the second half of 2009 will be tepid, However the pace of improvement points to a significant improvement in growth prospects in 2010.” he said.

Westpac has forecast that growth will increase from 1.4 per cent in 2009, to 3.8 per cent through the end of 2010.