Budget 2013/14 Northern Territory Economy
Tabled paper 295
Tabled papers for 12th Assembly 2012 - 2016; Tabled papers; ParliamentNT
Tabled by David Tollner
Made available by the Legislative Assembly of the Northern Territory under Standing Order 240. Where copyright subsists with a third party it remains with the original owner and permission may be required to reuse the material.
Department of the Treasury and Finance
External Economic Environment 33 Northern Territory Economy Japanese demand for LNG has led to INPEX and Total commencing construction of a twotrain LNG plant at Blaydin Point near Darwin (see Chapter 11: Construction). The construction of this plant will be the primary driver of economic growth in the Territory, not just over its fiveyear construction timeline but also once LNG exports commence in late 2016. After contracting by 0.5percent in 2011, Japans economy grew by 1.9percent in 2012, underpinned by ongoing reconstruction activity related to the earthquake and tsunami in 2011. Nevertheless, the Japanese economy went back into recession in the December quarter 2012 due to a widening trade deficit mainly caused by weak external demand in Japans key export markets such as the EU. Japans ongoing dispute with China over a set of islands, known as Senkaku in Japanese and Diaoyu in Chinese, in the East China Sea, also led to a consumer boycott of Japanese goods in China. In January 2013, the newly elected Japanese Government announced a 101trillion yen (approximately A$1trillion) stimulus package aimed at increasing the countrys economic growth to 2percent and increasing employment by more than 500000 in 2013. The Bank of Japan also signalled its support of the new Governments policy by raising its inflation target from 1percent to 2percent. Financial markets reacted swiftly to these announcements, leading to a substantial depreciation of the yen against a range of key currencies. These policy measures are expected to substantially boost economic activity in Japan over the next few years that will have flowon benefits to both the Australian and Territory economies. Additionally, the new Japanese Governments decision to retain the use of nuclear power is expected to increase the demand and price of uranium, which will in turn support additional exploration activity in the Territory, especially at EnergyResources Australias (ERA) Ranger uranium mine. In 2012, China was the Territorys second largest export and import market, with exports valued at $1.2 billion and imports valued at $210million. Goods exports to China were primarily metal ores such as zinc/lead concentrate from Xstratas McArthur River Mine and manganese from the OMHoldings and Groote Eylandt Mining Company mines. Services exports to China, namely tourism and education, made a small direct contribution to the Territory economy in 2012. Major imports from China include prefabricated building supplies, motor vehicles and industrial machinery. Chinese economic growth slowed from 9.3percent in 2011 to 7.8percent in 2012. This was primarily driven by Chinese Government measures to tighten credit growth to stem substantial asset price inflation, particularly in the residential property sector, and decreasing public infrastructure investment from highly stimulatory levels in 2011. Slowing global economic growth over 2012 also had a big impact on Chinese growth leading to weakening growth in exports, a substantial sector of the economy and the primary driver of growth over the previous ten years. Chinese economic growth is expected to strengthen to 8.0percent in 2013 before increasing to 8.2percent in 2014, underpinned by an accommodative monetary policy setting, strengthening growth in domestic demand and the commencement of major infrastructure projects. Between 2013 and 2016, China
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