22 April 2026 WESTPAC-MI LEADING INDEX BULLETIN Latest insights into economic momentum Key points Westpac-MI Westpac-MILeading LeadingIndex Index % ann % ann • Leading Index growth rate declines to 4 post-GST slowdown GFC COVID-19 4 –0.13% in March. 2 2 • First below-trend pace since August 0 0 last year. -2 -2 ‘delta’ lockdown • Interest rates and global energy shock -4 *6mth annualised, deviation from long run trend -4 clearly impacting. Sources: Westpac-Melbourne Institute -6 -6 Mar-98 Mar-02 Mar-06 Mar-10 Mar-14 Mar-18 Mar-22 Mar-26 Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts. WESTPAC ECONOMICS 1 BULLETIN Leading Index momentum dips back below trend Matthew Hassan Head of Australian Macro-Forecasting The six-month annualised growth rate in the Westpac– Melbourne Institute Leading Index, which indicates the The Westpac-Melbourne Institute Leading Index of likely pace of economic activity relative to trend three to Economic Activity is designed to assist in identifying nine months into the future, declined to –0.13% in March turning points in the economy. The index combines from +0.05% in February. variables that reflect different aspects of the economy into a single index that generally produces a more reliable The Australian economy has lost momentum over the first few cyclical indicator than any single component taken months of the year with more weakness likely to emerge in individually. The Leading Index of Economic Activity the months ahead. The March Index already points to a period provides advance information on the state of the economy of below-trend growth over the remainder of 2026. While and gives early warnings of cyclical turning points. the growth pulse is not overly weak, it is the first below- trend read since August last year and, prior to that, since the extended period of weakness during the ‘cost-of-living’ crisis of 2022–2024. The Leading Index growth rate has now swung from The Reserve Bank Monetary Policy Board (MPB) next meets +0.31% in October last year to –0.15% currently, a 0.44ppt on May 4–5. The latest Leading Index update confirms that deterioration. The detail shows clear drags from the shifting higher interest rates and the spike in fuel prices associated interest rate backdrop and the global energy shock associated with the conflict in the Middle East are starting to weigh on with the conflict in the Middle East. growth momentum, albeit fairly mildly. However, the MPB’s main concerns are likely to be around inflation with underlying Component-wise, the biggest negative shifts have come from: measures already above the RBA’s 2–3% target range and the Westpac–Melbourne Institute Consumer Expectations set to move higher as the effects of energy price rises come Index (a 20% drop over the last six months effectively taking through. On balance we expect the risk of this feeding into 0.27ppts off the headline growth rate); a sharp sell-off in the a lift in inflation expectations will over-ride the downside Australian sharemarket in the March month (–0.24ppts); and risks to growth. As such, we expect the MPB to raise the cash a flattening yield spread as short-term interest rates have rate by another 25bps in May with further moves likely in moved higher (–0.15ppts). Some of these declines may not be subsequent months. sustained though, with a notable recovery in sharemarket in the first three weeks of April. If it sustains, the move will be reflected in next month’s index. Roughly speaking, about 60% of the drag on the six month growth rate coming from these three components looks to be due to the conflict in the Middle East. All of sharemarket fall and about half of the sentiment decline since October has occurred after the conflict began. Most of the yield gap shift however can be attributed to monetary policy developments prior to the war. Other components have provided partial offsets. Most notably, higher commodity prices (up 11.9% in Australian dollar terms over the last six months) have added 0.09ppts to the Index growth rate over the same period. Dwelling approvals have added a further 0.11ppts although this is likely being exaggerated by a very choppy monthly profile (approvals jumped 30% in February after dropping 20% through December–January). The contribution from the remaining three components has seen no net change since October. Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts. WESTPAC ECONOMICS 2 Corporate Directory Westpac Economics / Australia Westpac Economics / New Zealand Sydney Auckland Level 19, 275 Kent Street Takutai on the Square Sydney NSW 2000 Level 8, 16 Takutai Square Australia Auckland, New Zealand E: economics@westpac.com.au E: economics@westpac.co.nz Luci Ellis Kelly Eckhold Chief Economist Westpac Group Chief Economist NZ E: luci.ellis@westpac.com.au E: kelly.eckhold@westpac.co.nz Matthew Hassan Michael Gordon Head of Australian Macro-Forecasting Senior Economist E: mhassan@westpac.com.au E: michael.gordon@westpac.co.nz Elliot Clarke Darren Gibbs Head of International Economics Senior Economist E: eclarke@westpac.com.au E: darren.gibbs@westpac.co.nz Sian Fenner Satish Ranchhod Head of Business and Industry Economics Senior Economist E: sian.fenner@westpac.com.au E: satish.ranchhod@westpac.co.nz Justin Smirk Paul Clark Senior Economist Industry Economist E: jsmirk@westpac.com.au E: paul.clarke@westpac.co.nz Pat Bustamante Senior Economist E: pat.bustamante@westpac.com.au Westpac Economics / Fiji Suva Mantas Vanagas 1 Thomson Street Senior Economist Suva, Fiji E: mantas.vanagas@westpac.com.au Shamal Chand Ryan Wells Senior Economist Economist E: shamal.chand@westpac.com.au E: ryan.wells@westpac.com.au Illiana Jain Economist E: illiana.jain@westpac.com.au Neha Sharma Economist E: neha.sharma1@westpac.com.au Luka Belobrajdic Economist E: luka.belobrajdic@westpac.com.au westpaciq.com.au DISCLAIMER ©2026 Westpac Banking Corporation ABN 33 007 457 141 (including position (including hedging and trading positions) for its own account where acting under any of its Westpac, St George, Bank of Melbourne or the account of a client in any financial instrument which may impact or BankSA brands, collectively, “Westpac”). 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Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts. WESTPAC ECONOMICS 5