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 35 Northern Territory Economy reassured investors that Greece will not be allowed to default. Nevertheless, the IMF is forecasting that the Italian, Spanish and Greek economies will continue contracting over 2013 primarily due to ongoing cuts to public spending, rising unemployment levels and high debt servicing costs that will constrain governments ability to stimulate economic activity. The economic slowdown across most of the EU and internationally also led to slowing economic activity in the two largest economies in the EU, Germany and France. Economic growth in Germany slowed from 3.0percent in 2011 to 0.7percent in 2012, as a result of slowing demand for exports across the EU and from key export partners such as the US and China. Frances economy slowed from growth of 1.7percent in 2011 to 0.1percent in 2012 driven by similar factors. Despite the spike in economic activity during the Olympic Games held in London, overall economic activity in the UK contracted in three of the four quarters of 2012. In addition to weak demand from key trading partners, cuts to public spending and weak consumer and business confidence also contributed to the contraction in the UK economy. The IMF is forecasting economic growth in the EU to be flat in 2013, reflecting weaker euroarea countries such as Italy, Greece and Spain dragging down their stronger peers economic performance. It is expected that economic growth in the EU will slowly strengthen from 2014 to 2016, although remaining well below longterm trend levels. Emerging Markets and Developing Economies Emerging markets and developing economies such as India, Indonesia, Thailand, Vietnam, the Philippines and Malaysia are important trade partners with the Territory. Indonesia and India were in the top ten Territory export destinations for merchandise goods in 2012, with exports also going to Malaysia, the Philippines, Vietnam and Thailand. The Territory mainly exports live cattle to Indonesia, Malaysia, Vietnam and the Philippines, and manganese to India. These countries are also a growing source of demand for Territory export services, predominantly tourism and education, reflecting the growing number of international students from these regions studying at the Charles Darwin University. Economic growth in India, the Territorys third largest export market, slowed from 7.7 per cent in 2011 to 4 per cent in 2012, the slowest growth in a decade. Slowing economic activity was mainly driven by contractionary monetary policy settings by the Reserve Bank of India (RBI), declining external demand for Indian goods and services, particularly from advanced economies in the euro area, and a weak monsoon that curtailed agricultural production. The IMF is forecasting a substantial rebound in the Indian economy over 2013, with economic growth strengthening to 5.8percent on the back of rising external demand, forecasts of a better monsoon season and a shift to a more expansionary policy setting by the RBI. The Indonesian economy grew by 6.2 per cent in 2012, driven by a strong domestic demand, particularly from increasing infrastructure investment and strong growth in household consumption underpinned by the decision of the Bank of Indonesia to leave interest rates unchanged over the year. Growth India Indonesia