- Victoria and Tasmania have tied first in the Commonwealth Bank’s assessment of the state economies.
- It’s the first time Tasmania has taken out the top rank in 11 years, with the coronavirus affecting each state differently.
- New South Wales meanwhile has slid to fourth place, with the ACT’s strong labour market securing it third.
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The coronavirus has instigated a major economic reshuffle of the Australian economy.
New South Wales, long an economic powerhouse, appears to be losing steam, as it slips to the fourth rank according to the Commonwealth Bank’s ‘state of states’ report on Monday.
As the housing market loses momentum, new residential construction has also fallen off the pace in the premier state. Quarterly starts are more than 8% down on their decade long average, while government shutdowns meanwhile have wreaked havoc on its service sector engine. Population growth slowed down by to 1.27% for the quarter.
While its annual economic growth has slipped to the second weakest in the country, CBA chief economist Craig James said shutdowns were hurting Australians across the nation.
“Regardless of the rankings, the impact of the coronavirus is posing significant challenges across all states and territories, especially those reliant on overseas tourism and overseas students,” James said. “While each state and territory has its unique pressures, we really are all in this together.”
That may be the case but some seem to be faring better than others. Tasmania surged to share the top spot with Victoria. It’s especially impressive considering the island state hasn’t been number one in over a decade, buoyed by the strongest population growth in the country.
It sees Victoria retain the top perch for the sixth year in a row. It’s helped in no small part by the fact its population growth remains twice that of its northern neighbour, keeping its retail sector in the best shape in the country.
If its a job you’re after, it’s the third-placed ACT you’ll be wanting. Trend unemployment in the bush capital is sitting at an equal 11-year low, or 3%.
While South Australia’s economy is actually growing at the worst rate, it’s still ranked fifth. It’s been propped up by strong building activity and investment in equipment.
Queensland, Western Australia and the Northern Territory might round out the bottom three but the latter two are actually beginning to catch up to the southeastern states. Craig contends Chinese stimulus could propel them higher again.
“Overall, some of the biggest improvements over the past quarter have come from South Australia, Western Australia and Northern Territory as these economies start to close the gap between those leading the rankings,” he said.
“Also the relaxing of social distancing restrictions and bringing forward of infrastructure projects may serve to boost recovery prospects of state and territory economies more generally.”
With the IMF expecting $130 billion to be wiped from the country, each is preparing for a giant recovery effort.