Northern Territory Treasury Corporation Annual report 2013-2014
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Northern Territory Treasury Corporation -- Periodicals; Finance, Public -- Northern Territory -- Periodicals
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Northern Territory Treasury Corporation30 External Economic Environment In its July 2014 World Economic Outlook Update, the International Monetary Fund forecasts global economic growth to strengthen from 3.2percent in 2013 to 3.4percent in 2014, and to average 3.9percent per annum between 2015 and 2017. In terms of the Territorys major export destinations, overall economic performance is expected to be favourable over the medium term with the exception of Japan where economic growth is forecast to remain relatively weak. However, this is not expected to have a significant impact on Territory goods exports to Japan, which are primarily LNG exports sold on long term contracts. The Australian economy is also important to the Territory primarily through interstate trade and goods and services tax revenue to the Territory. The key factors identified by the Reserve Bank of Australia (RBA) that will influence Australias economic growth over the next few years are: the expected decline in mining investment; consolidation of state and federal government budgets; and the exchange rate which remains at elevated levels. The RBA expects growth to be below trend levels in 2014-15 (between 2 and 3percent) before strengthening to around trend levels in 2015-16 (between2.5 and 3.5percent). Population In the March quarter 2014, the Territorys population grew by 1.4percent in annual terms, compared with the national average of 1.7percent. This follows particularly strong growth of 2.8percent in 2012, which was well above national growth (1.8percent). Typically, natural increase (births less deaths) has been the primary contributor to population growth in the Territory, however, its contribution to growth since the June quarter 2012 has been surpassed by that from net overseas migration. The contribution made by net overseas migration to the Territorys population growth has tripled in recent years from 1087 people in 2010 to 3196 people in 2013. While interstate migrants are also drawn to the Territory, the outflow of people to other jurisdictions tends to be greater so net interstate migration typically detracts from Territory population growth. The Territorys population is estimated to grow by 1.6percent in 2014 and 2.6percent in 2015 in line with elevated economic activity largely driven by the Ichthys project. In subsequent years, the expected transition of the Territory economy from the construction phase of major resource projects to the production and exports phase is expected to result in population growth to levels more consistent with natural increase. Labour Market Employment growth in the Territory strengthened from 2.6percent in 2012-13 to 4.3percent in 2013-14, while the Territorys unemployment rate of 4.8percent in August 2014 was the second lowest of all jurisdictions. Labour market conditions are expected to remain robust in 2014-15 in line with the peak level of onshore construction activity on the Ichthys project. This is expected to have a flow on effect boosting demand for labour in other sectors of the economy such as retail trade, accommodation and food services and rental, hiring and real estate services. From 2015-16, labour market conditions are forecast to soften as major projects move to the less labour intensive production phase. This is expected to lead to a moderation in employment growth and a rise in the unemployment rate. Despite the forecast rise, the Territorys unemployment rate is expected to remain one of the lowest in Australia.