Australia’s economic momentum decelerated in March, with the six-month annualised growth rate in the Westpac–Melbourne Institute Leading Index falling to 0.6%, down from 0.9% in February. This slowdown reflects the impact of recent global trade policy shifts, notably the U.
S. administration’s announcement of reciprocal tariffs on April 2, which have disrupted international trade dynamics.
Despite this deceleration, the index continues to indicate growth above the trend, suggesting that the Australian economy remains on a positive trajectory. However, the recent softening signals a significant shift, with further moderation in economic activity anticipated in the coming months. The Melbourne Institute of Applied Economic and Social Research and Westpac have noted that the index is only beginning to reflect the effects of these trade policy disruptions.
In response to these developments, Australia’s economic growth forecast for 2025 has been revised to 1.9%, down from previous projections. While the economy faces manageable tariff shocks, the slowdown underscores the sensitivity of Australia’s economic performance to global trade shifts and policy changes.
As the global trade landscape continues to evolve, Australia’s policymakers will need to navigate these challenges to sustain economic stability and growth. The full impact of recent trade policy changes will become clearer in the coming months, providing a more comprehensive understanding of their effects on the Australian economy.
