Australian economic growth outlook stabilizing: survey

The outlook for Australia's economic growth appears to be stabilizing and may push back the next interest rate rise, a report released by Australia's Westpac Banking Corporation and the Melbourne Institute on Wednesday has found.

The annualized growth rate of the Westpac/Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, rose 5.3 percent in March 2011, above its long term trend of 3.4 percent.

Westpac chief economist Bill Evans said the growth rate of the leading index appeared to be stabilizing at a pace above its trend rate.

"That growth pace is broadly consistent with Westpac's forecast that the Australian economy will be growing at an annualized pace of around 4.5 percent in the second half of 2011," he said in the report.

"The first half of 2011 will be distorted by the likely contraction in the economy in the first quarter, which will be mainly due to a likely drag on the growth rate of nearly two percentage points from the external sector and inventories."

Evans said the case for the Reserve Bank of Australia to raise the cash rate this year was still yet to be fully made.

"While it is reasonable for markets to assume that one month is not critical to a central bank market, pricing does not give full certainty to a hike until June next year," he said.

"Despite market expectations we continue to expect a rate move in the very near term," Evans said.

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