Qld economy needs pick up in private sector investment

According to the latest National Accounts released by the ABS last week, private sector investment spending fell in Queensland over the March quarter (in seasonally adjusted terms) and State Final Demand would have fallen as well, if it were not for growth in public sector expenditure (see chart below).

Decomposition_Mar17

Traditionally, economic growth is associated with growing private sector investment, and the absence of a pick up in private sector investment, after it plummeted at the end of the mining investment boom, has meant Queensland’s economy has been performing below-average (see previous post). While non-dwelling construction increased in March quarter by 2.1 percent, this was more than offset by a large fall in dwelling construction of 9.4 percent. Also, business investment on machinery and equipment was 6.1 percent lower than in the previous quarter (see chart below).

Investment_Mar17

As I have noted before (see Nervous times for construction industry as downswing underway), dwelling construction is in a downswing at the moment, but the large fall in March quarter would partly be attributable to the wet weather and Cyclone Debbie at the end of March quarter.

Regarding non-dwelling construction, further growth should occur as the Queen’s Wharf project ramps up and as other projects including possibly the Adani Carmichael mine and rail line commence. But more broadly-based private sector investment is required to really push the Queensland economy along.

For Queensland Treasury’s view on the outlook for the Queensland economy, please consider attending an upcoming Economic Society of Australia (Qld) seminar:

Upcoming Qld Treasury post-Budget briefing on outlook for Qld economy

Advertisements
This entry was posted in Macroeconomy, Mining, Uncategorized and tagged , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s