The latest economic reports from Deloitte and CommSec are out and, no doubt to the disappointment of their respective media officers, are both covered in the same Courier-Mail report this morning by John McCarthy:
QUEENSLAND appears to be stuck near the bottom rung of the economic performance of states, but reports released at the weekend claim the “storm clouds continue to clear’’ for the Sunshine State.
A Deloitte Access Economics report said Queensland had returned to its status as a preferred destination for Australians on the move.
I agree the “storm clouds continue to clear”, as I have been noting on this blog for over a year now, including in my recent posts Qld’s economic outlook for 2018 and Surge in Qld youth employment over 2017. And Deloitte is correct that Queensland has returned to the lead over other states and territories in net interstate migration, but the lead over second-placed Victoria is very small, only around 240 people in 2016-17 (see chart below). Furthermore, net interstate migration remains well below historical highs.
Apparently, Deloitte is forecasting Queensland economic growth of 3.5% p.a. and higher for the next four years, which is significantly higher than Queensland Treasury’s forecasts of 2.75% in 2017-18 and 3% in 2018-19. Of course, the reliability of precise forecasts several years out is very low. So it is courageous for Treasurer Trad to predict Queensland will lead the other states in economic growth “in each of the next four years”, as reported by the Courier-Mail.
Consider that, in December 2015, Deloitte was forecasting Queensland economic growth in 2016-17 of around 3.75%, with Queensland expected to grow faster than all the other states and territories except for WA and NT (see p. 6 of Deloitte’s Business Outlook from December 2015). But, according to the ABS State Accounts, Queensland ended up with the third lowest rate of economic growth in 2016-17 (1.8%) and WA ended up contracting 2.7%! For 2015-16, Deloitte forecast that Queensland would have the highest economic growth rate in Australia, but we ended up in only fourth place. Alas, economies are inherently difficult to forecast and, in my view, the utility of forecasts beyond the next six to twelve months is extremely low.
Per capita … per capita … In 2016-17 NSW GSP per capita grew faster than Vic despite GSP growing faster in Vic. As an extreme example Gross Production and growth is higher in India yet its per capita value is low. I’m sure lots of people would prefer to live in Vic than India if based solely on standard of living. Anywho, Queensland’s economic growth will rebound. Victoria’s economic growth has probably passed it’s peak. Population growth should ease off in Victoria too as jobs growth in WA and QLD reduces people moving out of those states. At some point Melbourne will become just as crowded as Sydney but without the concentration of high paying jobs. That raises the question of whether population is the be all and end all for “success” of a city or economic growth of a state. And then of course there’s the weather in Melbourne…
Thanks for the comment Al. I agree it’s per capita income that matters. Great observations.