Queensland’s economy rises to the challenge by playing to its strengths
15 March 2016: The resource boom was a once in 150 year event, which Queensland should think of, not as a hole to be filled, but as an opportunity for the state to reap the return on investments made during the boom, according to the Deloitte Access Economics’ March 2016 Queensland Business Outlook.
Entitled, ‘Challenge accepted’ Queensland Deloitte Access Partner Mark Ingham said: “As we place export growth firmly on the watch-and-wait list, it is time for Queensland to stop looking back and start exploiting the positives. The real opportunities for the Sunshine State are in our staples - housing construction, tourism, international education and agriculture. All are expected to get a kick along from the lower Aussie dollar.
“Queensland remains a great growth prospect – our five year forecasts have it near the front of the state pack – with a huge jump in LNG exports thanks to investment that is well underway, plus a range of other sectoral opportunities aided by Australia’s low interest rates and depreciated currency.
“Low interest rates will also continue to boost Queensland’s most volatile sector, housing construction, which has experienced an 11% increase in approvals over the past year. Tourism is also growing as a result of lower exchange rates, which is expected to stimulate the construction of new hotels and associated tourist infrastructure,” Ingham explained.
The AUD has depreciated by approximately 27% against the USD since September 2015. The exchange rate is driving tourism growth as international travel to Australia has become more affordable. Additionally, the recently revised Australia-China Air Services agreement will increase the total allowable capacity of Chinese passengers to Australian gateway cities by approximately 50% by October 2016.
Over the five year forecast, Queensland international tourist arrivals are expected to grow at a rate of approximately 5.7% per year. Most of this impact will occur this year when the Chinese capacity constraints are lifted. The growth in international tourism is expected to improve retail spending, as Chinese tourists spend an average of $4,201 per trip and 31% are repeat visitors.
“While wage growth is expected to remain weak in the near future, it is one of the main drivers of the forecast of a steady unemployment rate of 6%, as it has made workers a more competitive option for employers,” Ingham added.
But there are some risks
The huge surge in resource-related (especially gas) construction projects, is winding down – and fast. At the same time rotten world energy prices and China’s continuing slowdown suggest there’ll be no repeat performance of massive resource construction projects to pick up the baton, as current projects swing into their production phase.
Luckily, low interest rates and the lower Aussie dollar are supporting housing construction – the building of new homes and the renovation of old ones – and placing a floor under the shopping stamina of families.
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