Queensland’s economy positioned well for 2017
Deloitte Access Economics Quarterly Outlook
• Commodity prices, exports, tourism, household consumption, construction, and housing investment all up
• Queensland’s growth outlook to average 3.5% p.a. to 2020 and set to outpace NSW and Victoria (at around 2.5%), and the national average.
• Queensland’s State Final Demand, also continued to grow in positive territory up by 1.2% over the September quarter.
1 March 2017: Recent economic data indicates that Queensland’s economy is positioned well for 2017. Despite some hiccups in the September 2016 quarter which was a ‘confluence of temporary factors’, the ‘economy is in reasonable shape1’ overall.
In fact national income is rising at the fastest recorded speed since early 2012, thanks in part to a leap in commodity prices. And Queensland’s State Final Demand, also continued to grow in positive territory up by 1.2% over the September quarter.
“Queensland’s growth continues to be driven by LNG exports, and the surge in commodity prices is helping this along,” said Quarterly Outlook author and Deloitte Access Economics Partner, Natasha Doherty.
Doherty said: “Housing construction should remain strong, however there are signs of a slowdown to come in 2018 and 2019 for a number of reasons, including oversupply of inner-city apartments in Brisbane. Nevertheless Queensland may be seen as a new start for home ownership in 2017, as housing affordability is still a better option in Queensland than in some other states.”
Queensland also continues to outperform the nation in exports, with strong growth in coal exports worth $20 billion, as well as solid earnings from LNG exports.
“The growth in Queensland’s Gross State Product (GSP) is driven by these exports, as well as our strong tourism sector and a relatively low $A.
“Although business investment did remain subdued compared with the same time in 2015, the majority of commodity headwinds have passed, and it is becoming easier for the economy to grow,” Deloitte Access Economics Partner, Mark Ingham said.
“The drag we were experiencing from falling commodity prices is largely over, and we can see a light at the end of the tunnel as the nation as a whole is already 90% of the way through the fall in the mining investment peak,” Ingham said.
Employment down regionally but education, training & tourism will build sustainable growth
The performance of Queensland’s labour market however was mixed with employment down 1.3% over the year to December 2016, compared with a national growth of 0.8%. This impact was felt in regional Queensland.
“Overall, the Queensland economy is in reasonable shape for the start of 2017, and the state forecast is set to outperform the nation over the foreseeable future.”
Deloitte Managing Partner Queensland, John Greig said: “To ensure this growth we need to keep a sustained focus on our advantages. With the transition from the resource construction boom now in full swing, Queensland will need to continue to diversify, adding high value knowledge activity to the mix as outlined in our Shaping Future Cities - Queensland Future Now article released last year.”
The report points to opportuntiies such as how Queensland’s strong international education and training, agricultural and tourism sectors can create greater prosperity for Queenslanders, particularly in regional areas.
Greig said: “The recent $6 million boost to support Queensland’s international education and training sector for instance, has recognised the value in taking advantage of such opportunities. This along with tourism, are both promising areas of growth for Queensland.”
The Deloitte Access Economics September 2016 Quarterly Outlook also notes that tourist numbers are up, a trend that is set to stay due to support from the lower $A, the falling costs of air travel, and proximity to China.
Chinese tourists to Queensland increased to almost half a million in the September quarter. This contributed to the 33.5% growth over 2016, and delivering a solid $1.1 billion to overall visitor spend, which was up 10.6% to $5.2 billion in the year to September 2016.
“The Year of the Rooster is looking promising for Queensland,” said Greig. “And investment in tourism-related projects such as the Queen’s Wharf redevelopment and that of Great Keppel Island Resort will continue the boost.”
1 A50 Australian Economic Forum, Governor Lowe, 9 February 2017