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
6 Overview 2013-14 Budget Between 2013 and 2016, the IMF forecasts that global economic growth will return to long-term trend levels of around 4.2percent, largely driven by emerging and developing economies including China and India, where strengthening economic activity is expected to support export growth, employment and consumption in the global economy. The IMF is forecasting economic growth in Australia to strengthen to 3.2percent in 2014 and grow at trend levels through to 2016. Despite declining levels of mining investment from 2014, economic growth is forecast to be driven by strong growth in exports, especially for iron ore, as major projects are completed. While a high Australian dollar is expected to continue to adversely affect Australias tourism and manufacturing industries, low interest rates are expected to underpin household consumption and lead to a sustained recovery in dwelling investments. Annual population growth in the Territory is forecast to increase by 2.5percent in 2014 and 2015, driven by construction related to the Ichthys and gas to Gove projects, and the associated increase in demand for labour directly related to the projects and indirectly due to increasing levels of economic activity. Growth is forecast to slow to 1.0per cent in 2016 as the construction phase of these projects is completed and economic activity slows. Growth in the Darwin CPI is forecast to slow to 3.5per cent in 2014 and to 3.0percent in 2015, reflecting more moderate increases in utilities prices compared to 2013, and as project-related inflationary pressures are expected to be partly offset by a substantial increase in the number of new dwelling completions in the Darwin region. Nevertheless, the inflation rate in Darwin is expected to remain above long-term trend levels underpinned by higher aggregatedemand, as a result of population, employment and wage pressures arising from major projects and increased economic activity. In 2016, growth in the Darwin CPI is forecast to moderate to 2.5per cent reflecting the transition to the less labour-intensive operational phase of the Ichthys project. Wages growth in the Territory is forecast to strengthen to 3.4percent in 2013-14 and to 4.0percent in 2014-15 mainly due to higher demand for labour in the private sector, especially in the construction industry. Growth in private sector wages is expected to peak in 2014-15 in line with peak levels of activity at the Ichthys project. Overall wages growth in the Territory between 2013-14 and 2016-17 will be partially constrained by subdued growth in public sector wages reflecting budgetary constraints over this period across all tiers of government. Employment growth in the Territory is forecast to strengthen considerably between 2012-13 and 2014-15 as economic activity continues to strengthen and construction activity at the Ichthys and gas to Gove projects reach peak levels. This is expected to lead to a substantial decline in the unemployment rate over this period. Employment growth is forecast to slow to 1.5percent in 2015-16 as the Ichthys project is completed and non-resident workforce disperses, including a large proportion to other jurisdictions outside theTerritory. External Economic Environment Population Prices Wages Employment