Territory economic review
NT Treasury, Economic Analysis Division
Territory economic review; Department of Treasury and Finance newsletters; PublicationNT; E-Journals
Date:2001-10; Made available via the Publications (Legal Deposit) Act 2004 (NT).; This publication contains may contain links to external sites. These external sites may no longer be active.
Northern Territory -- Economic conditions -- Periodicals
Northern Territory Government
Northern Territorty Government
OCTOBER 2001 3 TERRITORY ECONOMIC REVIEW www.nt.gov.au/ntt/economic THE AUSTRALIAN ECONOMY Weak phase to continue The Australian economy is beginning to show some signs of recovery after a mild setback last year. Nonetheless, the June quarter national accounts contained weaker than expected private business investment and a downward revision of the March quarter GDP result. With a world downturn about to hit exports and the economy still vulnerable, activity is expected to remain relatively weak in 2001-02. some pick up in domestic demand Consumer spending has strengthened and residential building approvals have picked up sharply. However, construction growth comes from a lower base, more a technical rebound from abnormally low post-GST levels. The recovery in domestic demand will be moderate, with some residual cyclical weakness in IT, accounting and other sectors still to be shaken off. The flow-on from increased construction activity should become apparent next year, with increased employment feeding though to confidence and consumption growth. Short term, any dramatic acceleration in economic growth is unlikely as a weak labour market constrains income and consumption growth. The demise of Ansett will further weaken the labour market, with the loss of direct and indirect jobs, especially in tourism and related sectors, likely to have an immediate negative impact on economic growth. but slower export demand Net exports (exports less imports) has been a strong contributor to GDP growth, contributing 1.7 percentage points to growth in 2000-01. Exports have been supported by strong commodity prices and the extremely competitive Australian dollar. Deteriorating external conditions will, however, start to undermine Australias strong export performance over the next six months, and the downturn in world growth will remove one of the major positives supporting the economy in recent years. Although some of the slack will be taken up by firmer domestic demand, the weak external sector will mean an uneven growth performance will persist. to be exacerbated by recent events in the US Further adding to global economic uncertainty will be the fallout from the recent attack on the United States. The US has reduced interest rates and has not ruled out further action in an attempt to prop up an already weak economy. Nonetheless, the attack will undermine business and consumer confidence, and therefore spending. This will reduce US imports, affecting Australia both directly, and indirectly via Asian demand for commodities used for goods destined for the US. THE TERRITORY ECONOMY Air travel/tourism negatives Tourism is being affected by cancelled or deferred travel by US and other short term international visitors. In the Territory, tourism is a key private sector, labour intensive sector of the economy, driven by the high growth international market. Tourism has always been vulnerable to world economic downturns, particularly if key overseas source markets turn down. This was last seen in the early 1990s, with a resultant decline in international visitor nights spent in the Territory. The Territorys relative dependence on air travel adds a risk factor in terms of fallout associated with the collapse of Ansett. As was shown during the 1989 pilots strike, the impact will depend on the nature and timing of replacement capacity that comes on stream. Already the loss of Ansett seat capacity has been offset to a degree by extra Qantas services, international airlines carrying domestic passengers and the fast tracking of the entry of Virgin into the Territory market. with onshore demand still in a trough Territory real State Final Demand (SFD) fell by 2.7 per cent in 2000-01. This reflected a 21.6 per cent decrease in private gross fixed capital formation and a 24.5 per cent fall in public fixed capital formation, partially offset by increases in government final consumption (up 4.7 per cent) and household final consumption expenditure (up 1.6 per cent). Excluding the expenditure associated with the Laminaria-Corallina oil field, the Northern Territory Treasury estimates that year on year SFD growth was 0.1 per cent in June, down on the 1.9 per cent estimated for the March quarter. In addition, Bayu-Undan related expenditure (thought to have been a major contributor to the March quarter investment spike) was either minimal or not recorded in the June quarter capital expenditure figures as expected. The reason for this is not clear although ABS notes potential for large revisions as a better picture emerges. Positives from railway construction activity The Territory economy will benefit from the capital expenditure associated with construction of the railway. This will help bolster the construction industry, providing a timely boost to activity as the residential construction cycle begins to pick up again. The flow-on effects from a pick up in construction activity will strengthen the Territory economy and boost business and consumer confidence.
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