Opinion
Issue No. 27 - February/March
Prescott predicts strong year for SA
by Darryl Gobbett
The South Australian economy is set for solid growth in 2006 with the local mining and defence industries among the key drivers, according to wealth management and stockbroking firm, Prescott Securities.
“The State’s fertile economic environment coupled with the national outlook for low interest rates and inflation will fuel continued local business growth in the next 12 months,” says Darryl Gobbett, National Manager, Investments and Strategy for Prescott Securities and WHK Group.
“I would expect the State economy to keep up the momentum from 2005 and grow by between 3% and 4% in 2006 in line with national trends.”
However, Darryl foresees an unhappy New Year for the battling wine and automotive industries.
“High commodity prices and overseas demand for resources, particularly as a result of the continued rapid growth in China and India and the strengthening recovery in Japan, should keep local miners and explorers powering along,” he says.
“The expansion of the Olympic Dam mine should also be starting to boost SA investment and employment in 2006.
“The increasing activity and investor interest in the mining and resources sector augurs well for the future, although a lack of available drilling rigs may restrain growth, which is unlikely to match that expected in Western Australia or Queensland.
“Recent contract wins for the SA defence industry have laid a solid foundation for growth for a myriad of businesses with a flurry of infrastructure development likely to commence, particularly in response to the Air Warfare Destroyer contract.”
Excess capacity overseas will continue to make life hard for the State’s automotive industry, Darryl believes. However, the demand for labour in other manufacturing and service industries will provide opportunities for displaced automotive workers.
“Unfortunately, the wine industry should brace itself for further pain,” he says.
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