Lead Story
Issue No. 25 - October/November 2005
Steady Improvement
by Professor Richard Blandy
The latest data and projections for Australia and the world provide a very supportive backdrop to the outlook for South Australia into the medium term future. In turn, South Australian data show the State level-pegging with the country as a whole.
While not performing as strongly as Western Australia, South Australia has been outperforming New South Wales and Victoria on a number of economic indicators.
South Australia’s economic outlook continues to be good, therefore, at least to the end of 2006.
Over the year to June 2005, Australia’s GDP grew by 2.3 per cent, according to the most recent figures from the Australian Bureau of Statistics, indicating a substantial recovery from the very slow growth of the October and December quarters in 2004.
As I foreshadowed six months ago, these quarters of slow growth look increasingly more like a measurement blip than a genuine occurrence, because employment has been growing persistently at a fast clip.
If a delay can be expected between a slowdown in economic growth and a slowdown in employment growth (as some have not unreasonably argued), the slowdown in employment growth should have shown up in the employment data by now.
No such slowdown has been observed. Hence, the probability is now high that there has, in fact, been no substantial economic slow down in Australia, contrary to what the GDP figures said six-to-nine months ago. There may well have been a moderate slowdown from GDP growth from middle-to-high 3% growth, but probably only to the 2.5% to 3% growth range, at worst.
Income growth
Australian net national income increased by 3.8% over the year to June 2005, thanks, partly, to a (huge) 11.5% improvement in Australia’s terms of trade (the value of Australian imports that a dollar of Australian exports will buy).
Consumption and exports grew by 2.8%, while Australian private business investment grew by 7.1% over the year to June...
