Australia’s Westpac–Melbourne Institute Leading Index held steady at +0.08% in February 2026, unchanged from January but down from +0.13% in September 2025. The index, which forecasts economic activity three to nine months ahead, indicates growth remains slightly above trend but is losing momentum due to financial market pressures, including a weakening S&P/ASX 200. Higher commodity prices and increased hours worked partially offset declines in equity markets. Westpac forecasts GDP growth to slow to 2.0% in 2026 from 2.5% in 2025, citing Reserve Bank of Australia (RBA) rate hikes and the Middle East conflict as key headwinds. Tightening financial conditions and global uncertainties are expected to further dampen business and consumer confidence. For markets, the weakening contribution of the ASX 200 signals potential drag on the index, affecting investor sentiment. Traders should monitor RBA policy decisions and commodity price trends, as elevated energy costs and geopolitical risks could amplify volatility. The slowdown in Australia’s growth trajectory may also influence global trade dynamics, particularly for commodity-dependent economies. The outlook underscores a shift toward moderation in the Australian economy. Investors should watch for further RBA rate hikes and the evolving impact of the Middle East conflict. For MENA markets, the slowdown could indirectly affect commodity-linked sectors and global risk appetite, with implications for regional equity and forex markets.
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