Lead Story
Issue No. 19 - October/November 2004
South Australian Economic Outlook
Stronger Than That
by Professor Richard Blandy
Economic growth over the next 18 months should be similar to the growth rate of the Australian economy as a whole. Adelaide's cost competitiveness is strong and underpins the expansion of a large range of activities. Export volumes are recovering as the world economy moves strongly forward, with Australian dollar prices being well maintained. Employment outcomes and international migration flows into South Australia should reflect this positive environment.
However, looking further out than the next 18 months, if the Mitsubishi Motors assembly plant were to close in addition to the engine plant, the impact on the southern suburbs would be significant. The impact on the South Australian economy as a whole would be to cut perhaps 0.25 percentage points off the growth rate of South Australia's Gross State Product for a number of years, say, from 3.5% to 3.25%.
As usual, I start the present review by considering the background outlook for the world and Australian economies before reviewing a range of indicators for South Australia compared with the other States. The reason for starting this way is, of course, because the South Australian economy is increasingly integrated with the economies of the other States and with the world around us, because of falling transport and communication costs, and falling economic policy barriers (like tariffs and quotas).
Economic developments in the world around us have an increasingly strong bearing on what South Australia's fortunes are likely to be, therefore. It is a mistake to suppose that local events are necessarily caused by autonomous local actions. What happens locally is often the result of events and decisions occurring far from our borders.
The World & Australian economic outlook
In Table 1 the most recent economic forecasts for the world and various regions and countries are provided by some of the leading international forecasters.
