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Budget Paper No.6 1997/98 Northern Territory Economy



Budget Paper No.6 1997/98 Northern Territory Economy

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Tabled Paper 3223


Tabled Papers for 7th Assembly 1994 - 1997; Tabled papers; ParliamentNT; Tabled Papers




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The ASEAN countries of Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam are the Territorys closest neighbours. In 1996 they had a combined GDP of $US 666 billion, which is almost twice as large as the Australian economy. The countries of South Korea, Taiwan and Hong Kong, collectively referred to as the Three Dragons, had a combined GDP of $US 911 billion, while East Asias largest economies were China ($US 738 billion) and Japan ($US 5 285 billion). Economic Growth As shown in Figure 4.1, in 1996 the Territory economy, as measured by Gross State Product, grew by 2.7%. This is an experimental estimate of economic activity in the Territory and the Australian Bureau of Statistics recommends that it be used with caution. A more reliable indicator of economic activity is State Final Demand which increased by 7.3% in 1996. This was faster than Australia and about the same as the ASEAN economies. Economic growth in Australia during 1996 remained relatively strong at 4.2%, primarily supported by private consumption expenditure. Australia continues to enjoy a high rate of growth compared to other members of the Organisation for Economic Cooperation and Development (OECD), although lower than most East Asian economies. The recovery in the Japanese economy continued in 1996 with annual growth of 3.4%. This came after growth of around 1% in the previous two years. An increase in the rate of consumption tax and the removal of the income tax rebate is expected to weaken consumer spending and as a result growth is expected to slow over 1997 and 1998. At the other extreme the Chinese economy continues to experience exceptionally high growth. In 1996 it is estimated that the Chinese economy grew by 9.7%, although this rapid rate of growth has slowed over the past five years. An acceleration in growth is anticipated over the next two years in response to interest rate cuts and looser credit control. The Three Dragons continued to grow strongly in 1996, although at a somewhat slower 6.1%. Once again South Korea was the fastest growing economy, increasing by 6.8% in 1996. South Koreas trade performance deteriorated in 1996 caused by rapid growth in imports in response to an increase in average incomes. Industrial unrest in response to controversial labour laws has resulted in a further slow down in economic activity forecast in 1997. Taiwan also experienced a slow down in growth in 1996, growing by 5.6%. Taiwan is in a sound position with a strong current account surplus and low inflation. Taiwan is expected to grow more strongly in 1997 and 1998. Hong Kong experienced growth of 4.5% in 1996, its lowest rate of growth since 1990. Despite any uncertainty concerning Hong Kong becoming a Special Administrative Region of China from 1 July 1997, growth is expected to pick up in 1997 to 5.5% Regional Economic Environment 22