Modest Growth Forecast; Melbourne Institute Says Economy to Trend at 2.5%

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LATEST research from the Melbourne Institute suggests the economy will look like it's chugging along at a reasonable clip by the end of the March quarter.

The institute is predicting annual growth at around the economy's annual trend rate, which is usually seen at 3.25%.

However, this will be more to do with a statistical distortion rather than the economy finding a second wind.

aWe expect activity to remain modest ... our forward indicators all point to moderate growth,a the Melbourne Institute says in its monthly bulletin of economic trends, released yesterday.

It is forecasting gross domestic product growth of 0.6% in the March quarter, only a minor acceleration from the tepid 0.4% growth in the December quarter.

However, because the 0.3% GDP contraction record in the March quarter of last year a following the Queensland floods a will drop out of the equation, there will be a spike above 3% in the annual rate from a mere 2. …