Australia’s economy cruising for a bruising

A major bank says the Australian economy is heading for an abrupt slowdown.

And some people – such as homebuyers – might welcome that – as it could reduce the risk of further interest rate rises.

But that is by no means certain.

Westpac reported today that its leading index now stands at its lowest point in almost five years.

Its senior economist, Matthew Hassan, said this indicator is continuing to point to “an abrupt slowdown.”

He said shoppers had already been “jolted” by previous rate rises.

“Meanwhile business investment is also coming under pressure,” Hassan added.

He pointed to the likelihood of a two speed economy, with the minerals boom continuing to run at full speed, while other sectors of the economy slowed.

But Australia’s banks are by no means unanimous in their predictions.

The ANZ, for example, expects Australia’s inflation to peak at 4.9 per cent, later this year.

And it believes this will lead to further interest rate rises.

“…further rises will be the appropriate policy,” an ANZ economist said.