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Territory economic review



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

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Northern Territory Government

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Northern Territorty Government

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OCTOBER 2001 9 TERRITORY ECONOMIC REVIEW www.nt.gov.au/ntt/economic anticipated), the eventual recovery in the US economy could be very strong. Japan After decades of high growth, the problematic Japanese economy has produced an average annual growth rate of only 2 per cent since 1990. The new Government of Prime Minister Koizumi has set about cleaning up the banking systems bad debts and is expected to announce a supplementary budget to alleviate the effects of the downturn. Consensus Economics (a London based company) predicts that Japan will experience negative annual growth until mid-2002 and weak growth (less than 1 per cent) until the end of 2003. Western Europe While the core European economies continue to slow, the outlook is more promising than in the US or Japan. Year on year data show GDP growth is still above 2 per cent in the United Kingdom, Germany and France. The decline in United States demand will affect the European Union countries to a lesser extent than elsewhere given the significance of intra-European trade. Further interest rate cuts in the wake of the attacks in America will help to underpin future growth. Asia Many countries in the Asian region rely heavily on export sales to the United States (particularly of electronic goods) and demand from Japan. As such, short term growth prospects have been adjusted downwards for most East Asian economies. The downturn in global demand for electronics has had a particularly severe effect on the small Singapore economy. Consensus forecasts that Singapore will have the lowest GDP growth of all information technology led economies in 2001. Malaysia, the Philippines and Thailand have also been particularly hard hit, with rising labour costs and appreciating currencies (especially against the Yen) eroding their competitive advantage in the declining technology sector. On the positive side, Chinas economy has consistently grown at around 8 per cent per annum during the 1990s and Consensus expects real GDP to continue to grow by around this rate in the foreseeable future. Territory exports vulnerable A large proportion of Territory exports are used in manufacturing production in South East Asia, often for subsequent export to the US and other industrialised nations. It is through these industry and end use consumer demand linkages that economic conditions in the major growth centres of the world can affect the Territory economy. with less options to shift between markets While the downturn in South East Asia is not expected to be as severe as the 1997-98 Asian crisis, several key Asian economies are already in the midst of recession, and exporters have fewer options to shift product between world markets. but the competitive Aussie dollar will help However, despite the global economic downturn, Territory international trade should remain fairly strong, driven by oil exports and the low Australian dollar. These factors will cushion, to some extent, Australian and Territory exports from the negative effect of weaker commodity prices. Narrow export base Over the past decade Territory merchandise exports have been dominated by minerals and energy, which have accounted for at least 80 per cent of exports. Live cattle also make a significant contribution, with the remaining categories (including beverages and tobacco, animal & vegetable oils, manufactured goods, machinery and transport equipment, and chemical related products) generally accounting for only 1-2 per cent of total Territory international merchandise exports. Commodity prices set to soften Commodity prices are heavily dependent on world growth. Given the weakness of the world economy, US dollar denominated prices for many commodities may soften, with weaker industrial production particularly affecting base metals. In the Territory, mineral ore exports have been traditionally dominated by bauxite and alumina, manganese, zinc/lead concentrates, and uranium ore. The export value of these commodities has been consistently between $0.9 and $1.2 billion over the past few years. Mineral fuel exports (primarily crude oil), accounted for around 20 per cent of Territory international merchandise exports for most of the 1990s. However, commencement of oil production from the Laminaria-Corallina oil field saw this jump to 65 per cent in 2000-01, as oil exports increased from $1.2 billion to $3 billion. Production levels are expected to decline from 2001-02 as well pressure decreases, though it will jump again in late 2003 as Bayu-Undan begins production.