Queensland had the second lowest rate of State Final Demand (SFD) growth in the first quarter of 2021, according to the March quarter National Accounts published by the ABS yesterday. Queensland’s SFD grew at 0.4% compared with a national average of 1.6%. All states and territories saw increases in SFD except for NT where it fell 1.9% (because there was a huge temporary boost to CAPEX in the December quarter in the NT). As discussed in recent QEW posts, Queensland’s economic growth performance is being compromised by declining business capital investment (see the chart below illustrating the impact of this decline on SFD growth).

Specifically, non-dwelling building investment and heavy/engineering construction investment have been falling (see chart below). Of course, the booming property market is making positive contributions to SFD, with dwelling investments and ownership transfer costs (i.e. real estate commissions and stamp duty) surging.

For a closer look at the March quarter National Accounts, check out Pete Faulkner’s Conus Quarterly. Pete has a nice summary of the state of play in international-tourism-dependent Far North Queensland:

…with the international border still closed, and with the recent Federal Budget making it clear that the Government is not expecting it to open in any meaningful way to international tourism until the middle of next year, the tourism sector in the Far North will continue to struggle to make up the slack left by the absence of international visitors.

The recent shut-down in Victoria will obviously not help with domestic tourism certain to take another backward step. Not only will people be forced to reconsider immediate travel plans but this might also make travellers be more cautious about future travel plans.

The Victorian COVID outbreak is obviously a huge risk to the economic outlook from here. We await news of what new assistance the federal government will offer and whether that will be made available more broadly, including to struggling regional tourism businesses in Queensland.

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