Lead Story
Issue No. 11 - June/July 2003
Short Term Satisfaction
by Professor Richard Blandy
South Australia’s economic outlook over the next eighteen months looks likely to be pretty much a continuation of the excellent economic performance that the State has enjoyed over the past two years — and very much better than over the previous decade.
This conclusion emerges from an examination of the economic outlook for the world (with whom Australia — and South Australia — are in nearly free trade), the economic outlook for Australia itself (which has a strong bearing on South Australia’s prospects), and South Australia’s improved recent economic performance compared with it’s longer-run past.
The world and Australian economic outlook
According to a number of global economic forecasters (see Table 1), the world economic outlook for the current calendar year is about the same as for 2002: rather flat. There will be some growth, but it will be concentrated in North America and Asia (excluding Japan). Europe will be weak, with Germany likely having gone into recession. Notwithstanding this global slowdown, Australia is expected to again be a standout economic success among OECD countries, although it, too, will slow (to about 3 per cent in calendar 2003). As outlined in the recent Commonwealth Budget, the Commonwealth Treasury expects economic growth over the next 12 months to June 2004 to be 3.25 per cent, confirming the forecasts by others in Table 1.
This outlook for Australia for the balance of 2003 is supported by the Melbourne Institute’s Leading Index and the ANZ Bank’s Job Advertisement Series, both of which are implying a moderate slowdown in economic growth.
The global economic growth outlook for 2004 is quite a bit stronger, concentrated again in North America and Asia. As shown in Table 2, this improvement in world growth underpins an outlook for Australia in which Australia’s economy is expected to grow between 3.5 per cent and 4.0 per cent in 200...
