Territory Stories

Territory economic review

Details:

Title

Territory economic review

Creator

NT Treasury, Economic Analysis Division

Collection

Territory economic review; Department of Treasury and Finance newsletters; PublicationNT; E-Journals

Date

2001-09-01

Notes

Date:2001-09; 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.

Language

English

Subject

Northern Territory -- Economic conditions -- Periodicals

Publisher name

Northern Territory Government

Place of publication

Darwin

File type

application/pdf

Copyright owner

Northern Territorty Government

Parent handle

https://hdl.handle.net/10070/212444

Citation address

https://hdl.handle.net/10070/716386

Page content

SEPTEMBER 2001 3 TERRITORY ECONOMIC REVIEW www.nt.gov.au/ntt/economic THE AUSTRALIAN ECONOMY The worst may be over Although the current downturn has to run its course, several factors support a recovery in the Australian economy. The impact of one-off factors which distorted activity and contributed to the current slowdown over the past twelve months are now fading (primarily the Olympics and the introduction of the GST), with the current pick up being supported by expansionary fiscal and monetary policy. The housing sector has already begun a technical correction back to more normal levels after the slump in residential construction. Housing finance commitments and approvals have jumped markedly, assisted by the extension of the First Home Buyers Scheme. The flow-on from increased construction activity should become apparent next year, with increased employment feeding though to confidence and consumption growth. but a sustained recovery may be some time off There has already been improvement in consumer and business confidence as a number of partial indicators begin to turn. Expansionary monetary and fiscal policy will also further support economic growth. However, a dramatic acceleration in economic growth is unlikely. The labour market remains weak (especially full time employment), and this will constrain aggregate income and consumption expenditure growth in the short term. Nonetheless, domestic demand will pick up in time, with falling external demand emerging as the major threat to growth. as external demand weakens The external sector contributed strongly to GDP last year as rising exports coincided with slowing import growth. Much of this was due to the extremely competitive Australian dollar, but strong world demand was also a factor. The dollar is still low, but world demand is slowing sharply, particularly in the United States and around the Asia Pacific region. Exports will weaken, having a much lesser impact on growth than in previous years. On the positive side, some of the factors causing the slowdown in the US and Japan are not present in the Australian economy. Australia has only a small technology sector, has not experienced a major fall in share or property prices, and has no major economic imbalances to be corrected. As a result, the Australian economy should be partially insulated from the downturn in global economy. Added to this, the weak Australian dollar will moderate the impact of slower growth in our trading partners. THE TERRITORY ECONOMY Railway construction underway 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. In conjunction with low interest rates, employment growth is expected to lift consumer spending. An upturn in retail and business services, as well as sustained growth in tourism, is expected as the business cycle turns. As a result, growth in private consumption expenditure is set to recover over 2001-02, before strengthening again further out. but deferral of the pipeline decision Phillips has deferred making a decision on construction of the gas pipeline from Bayu-Undan to Darwin. The decision follows the East Timor interim Governments proposed changes to its taxation regime for petroleum developments in waters jointly managed by Australia and East Timor. In the short term the decision is a setback to Darwins prospects of attracting gas-based manufacturing industries. and onshore gas-related proposals At the same time, Shell/Woodside, operator of the Greater Sunrise project, has outlined plans for the development of a world first floating LNG facility. Such a project would not require the transportation of gas to Darwin. While only mooted as a concept at present (BHP previously proposed a similar concept), industry sources say the technology needs to be accepted by LNG buyers. could have implications for growth Assuming onshore gas-related projects proceed as planned, Treasury forecasts average annual real GSP growth over the next five years at 6.7 per cent as the Territory enters another phase of strong economic development. Excluding the effects of the on-shore gas projects, Territory GSP growth would average around 4.0 per cent per annum over the next five years. While this is lower by two to three percentage points, economic growth in the Territory would still remain higher than forecasts for national growth over the same period.


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