Lead Story
Issue No. 17 - June/July 2004
South Australian Economic Outlook
by Professor Richard Blandy
Twelve months ago, in ‘in-business’ South Australia, I said that the economic outlook for South Australia over the next 18 months looked likely to be pretty much a continuation of the excellent economic performance that the State had enjoyed over the past two years — and very much better than over the previous decade.
Six months ago the data continued to support a very strong view of the outlook for South Australia.
Over the most recent six months, however, some data have been far less bullish than they have been previously, while other data have shown a continuation of economic performance on a par with the rest of Australia, leading to a somewhat self-contradictory collection of pieces of information.
In the present article, I reach the view that the true picture of South Australia is almost certainly positive, and that the disconfirming data are likely to be misleading. Consequently, I expect that these data will be revised in due course in more positive directions, and/or that the random statistical causes of present weakness in the data will wash out in future numbers, restoring the trends to more positive trajectories.
As I write, the future of Mitsubishi Motors Australia has come under a significant cloud as a result of a planned restructuring of Mitsubishi’s worldwide operations. If MMAL were forced to cease operations, the impact on the South Australian economy would be severe, cutting perhaps half a percentage point off South Australia’s annual economic growth for a number of years and slowing employment growth concomitantly. The present article assumes that MMAL will not cease or significantly reduce its operations in South Australia.
I conclude that the economic outlook for South Australia is good. Economic growth over the next eighteen months should be similar to the growth rate of the Australian economy as a whole.
Adelaide’s cost competitiveness is very strong and underpins the expa...
