Thursday, December 08, 2011

It's the west and north that's doing it. Why our economic growth looks good


September quarter real GDP growth

China: 2.3%
Japan: 1.5%
Australia: 1%
Canada: 0.86%
South Korea: 0.8%
Germany: 0.5%
US: 2%
UK: 0.5%
Euro zone: 0.2%

ABS 5206.0, Eurostat


September growth in state final demand

Western Australia: 8.4%
Queensland: 3.5%
Tasmania 1.1%
NSW: 0.5%
Victoria: -0.1%
South Australia: -1.6%

ABS 5206.0

Australia’s economy has roared out of the blocks after this year’s devastating natural disasters, but almost all of the action is in two states.

Treasurer Wayne Swan yesterday hailed economic growth figures he said were “exceptional, particularly at a time when most economies are struggling to grow at all and suffering mass unemployment”.

Gross domestic product grew 1 per cent in the September quarter following a rebound of 1.4 per cent in the June quarter after negative growth in the wake of the Queensland floods.

By contrast South Korea grew 0.8 per cent, Germany and the United Kingdom 0.5 per cent and the entire euro currency area 0.2 per cent.

Only Japan grew faster among the developed nations in the quarter, and it has been growing more slowly than Australia over the year.

But away from Western Australia and Queensland growth was anemic. NSW state final demand barely grew at all, climbing 0.5 per cent in the quarter. Victorian state final demand slipped 0.1 per cent. Western Australia - with a mere one tenth of Australia’s population - recorded demand growth of 8.4 per cent. Queensland recorded 3.5 per cent.

Over the past year state final demand in Western Australia has grown at a blistering 16.4 per cent, demand in Queensland by 9.3 per cent. The rest of the nation grew 1.3 per cent...

In both states growth was driven by a surge of investment. Western Australian business investment surged 27 per cent in the quarter, Queensland business investment 12 per cent.

Mining and mining-related construction drove the burst of investment with big liquefied natural gas projects in Queensland and Western Australia helping push up engineering construction 31 per cent in the quarter and 52 per cent over the year – the biggest annual increase in 30 years.

“As we go forward, you will see strong growth in investment, but it may well come in big lumps,” Mr Swan told a parliament house press conference. “We will see some quarters where it is not as strong and others where it comes through really strongly. But all of these projects are based on long-term investment horizons, and provide a solid bedrock in our economy.”

Government demand slipped away quickly as the budget was tightened, sliding 2.6 per cent or $2.1 billion in the quarter. Public investment slipped 7.2 per cent as stimulus building projects wound up.

Consumer spending held up well, climbing 1.2 per cent in the quarter and 3.8 per cent over the year - faster than the rate of retail sales growth suggesting a good deal of spending is on services, overseas tourism and direct overseas purchases not captured in the retail figures.

Spending on so-called vices has been sliding rapidly. Gambling losses accounted for only 2.8 per cent of consumer spending, down from 4.1 per cent a decade earlier. Cigarettes and tobacco accounted for only 1.4 per cent of spending, down from 2.4 per cent a decade earlier.

Wage income per person grew by around 5.5 per cent over the year but much of it was squirrelled away rather than spent. The household saving ratio stayed fairly steady at 10.1 per cent, close to its long-term high.

The news had little effect on financial markets. Reflecting economic conditions in July, August and September it is regarded as dated, providing a view of the economy before the renewed problems in Europe and before Australian export prices turned down.

Published in today's SMH and Age

Related Posts

. June quarter: We're back, and when the mines start moving it will be even better

. March quarter: A GDP one-off? You'd want to hope so

. December quarter: If it weren't for the floods... growth miracle interrupted